BMA Business, Management and Administration · Business, Management and Administration ... Script.ppt Porsche Consulting Source: BCG ... Script.ppt Porsche Consulting The matrix organization

Business, Management and Administration

Academic Sponsors: Porsche Consulting

Collège des Ingénieurs

Manufacturing

Business Management and AdministrationBusiness Management and Administration

B AM

INT1101_PRES_110520_2_DAK Vorlesung_Manufacturing_Script.ppt1Porsche Consulting

Agenda

May 20th, 2011

14:00 Introduction to Manufacturing

Agenda:

Lecturer:

14:15 Strategic Decisions

16:00 Achieving Operational Excellence

Darius Khodawandi Principal, Porsche Consulting

17:00 Questions & Answers

15:00 Operational Management

17:15 End


The Porsche is composed of four different model lines

* All model lines excluding spare parts ** Until facelift

Source: Automobilproduktion

Porsche’s business system

650 suppliers22,000 active

part numbers> 80% of value

added

Supplier base*

850 dealers104 markets

~ 10,000 parts400 - 40,000 units

per year per model~ 100.000

vehicles per year107 variants

(all profitable)Ramp-up in

3 months3 year lifecycle**

The product

Cayenne

Boxster/Cayman

911

Panamera


A network of sites provides flexibility

Source: Porsche AG, Porsche Consulting

Stuttgart Leipzig

Hannover

Bratislava

Body

Body

Engines

15 - 20%

10 - 15%

Porsche value creation


Today the Porsche range comprises 4 lines with 28 models and derivates

Source: Porsche AG

911 911 Carrera 911 Carrera S 911 Carrera Cabriolet 911 Carrera S Cabriolet 911 Carrera 4 911 Carrera 4S 911 Carrera 4 Cabriolet 911 Carrera 4S Cabriolet

Boxster/ Cayman

Boxster Boxster S Boxster Spyder

Cayenne Cayenne Cayenne Diesel Cayenne S

Panamera Panamera Panamera S Panamera Turbo

Common parts

Common processes

Common suppliers

911 Targa 4 911 Targa 4S 911 Turbo 911 Turbo S 911 Turbo Cabriolet 911 GT2 911 GT3 911 GT3 RS 911 Sport Classic

Cayman Cayman S

Cayenne GTS Cayenne Turbo Cayenne Turbo S


Porsche AG in Zuffenhausen

Plant Stuttgart-Zuffenhausen

Source: Porsche AG


Agenda

May 20th, 2011


Agenda:

Lecturer:






17:15 End


Strategicparameter

“production”

When?

Who?

Where?

How?

What?

In order to establish a strategy different parameter have to be considered

Production strategy

Source: Porsche Consulting


The answer to the question “How do we produce?” is a core element concerning the definition of the production strategyStrategic parameter “How”


Technology

Which technology should be applied ?Life cycle concept Experience curve modelS-curve model

Organization

How to organize production ? Structural organization Process organization


“

Pacesetter for technology

Key technology Basistechnology

Dry machining during metal cutting

Technology performance

Laser beam welding Casting techniques

cumulated R&D Expense

Whether to choose a technology or not strongly depends on its current life cycle phase “How”-Technology – Technology´s life cycle concept (S-curve)



S-curves illustrate the relation between required technology investment and its predicted performance “How”-Technology – S-curve-concept (substitution potential concept)


Core statement

The “substitution potential concept” evaluates when a shift in technology is economically viable.


Source: BCG Perspectives

An important tool concerning the technology choice is experience curve model

“How”-Technology – Experience curve model


Core statement

Cost of value added decline approximately 20 to 30 percent in real term each time accumulated experienceis doubled

(Bruce Henderson)

Causes of cost degressionProcesses and production techniques are

designed more efficientlyQualification of employees Use of Economies of Scale (e.g., discount bulk)


Ex-post-analysis corroborates the results of the experience curves

“How”-Technology – Experience curve model



The Structural organization can be categorized according to different basic forms

“How”-structural organization – Basic forms


Function-oriented organization Center organization

Matrix organization

Corporate Governance

Prod

uctA

Prod

uctB

Production Procurement

Prod

uctA

Prod

uctB

Marketing

Prod

uctA

Prod

uctB

Distribution

Prod

uctA

Prod

uctB


Center B Center CCenter A

Product A

Product B


Production Procurementt

Marketing Distribution



Prod

uctA

Prod

uctB

Production Procurement

Prod

uctA

Prod

uctB

Marketing

Prod

uctA

Prod

uctB

Distribution

Prod

uctA

Prod

uctB

The function orientation is the classical organizational form

“How”- structural organization - Function-oriented organization


Advantages Disadvantages

Partly untransparent organizationCoordination deficits between the functional

divisionsDanger of suboptimal states in the

departments/functional divisions

Opportunity to specialize in the functional divisions


The matrix organization goes beyond the classical functional focus on business processes“How”-structural organization – Matrix organization



Competence problems concerning overlapping operational Longer lasting decision-making processDanger of not achieving an optimal choice due

to compromises within the team High communication effort

Enhancement of group work Improved problem solving as employees from

different departments start to collaborateLess work on the management level

Product A

Product B


Production Procurement Marketing Distribution


When using the center-concept object-oriented business areas will be determined

“How”-structural organization – Center organization



Less control through the management level Danger of coordination problems between the

business units Higher personnel cost for managers Striving for company success within the business

units may not be long-lasting

Quick and flexible decisions in independent unitsShorter communication channels Less work on the management level Improved motivation through employee

empowering


Center B Center CCenter A

Variants:

Profit-Center: A pre-defined profit has to be achieved within a certain period

Cost-Center: A pre-defined sales volume cannot exceed a certain level of costs

Service-Center: Customer Care; the consumer determines the amount of goods and services; provision of service and goods will be settled internally


A key element concerning the definition of the production strategy is the choice of the process structure“How”-structural organization – Basic principles of the Process organization (I)


Stationary production

Characteristics Applied for products that are difficult to move;

product does not leave its positionApplied for small scale production

Workshop production

Characteristics Applied for small and medium size series with high

numbers of variants or individualized features Centralized production processes Strategy of utilization of capacity possible

Schematic

Assembly site

VM VM

VM

milling drilling

turning

sanding

assembly

Schema


Important basic forms of flow production (schematic)

straight flow

U-formserpentine

For the series and mass production the concept of flow production is applied

“How”- structural organization - Basic principles of the process organization (II)


Flow production

Characteristics Machines and plants are arranged according to the

assembly sequenceApplication of series and mass production Implementation of a minimal through-put time

strategy


Location factors determine the choice of the production location

Strategic parameter “Where”


Economic-demographic conditions

Tax, customs duties, state subsidy, currency risksTraining structure Labor supply (qualification, amount)Balanced age structure

Political-legal conditions

Political stability Investment protection Labor-law standard situation/trade unions Environmental standards (sewage, exhaust gases)


Location factors determine the choice of the production location

Strategic parameter “Where”


Infrastructure conditions

Capacity of transport routes Energy supply (negative example: Silicon Valley)Connection to suppliers and customers Schools, hospitals, supply facilities Communication facilities

Geographical conditions

Security from natural disaster (earthquake, flood, storms, etc.)Opportunity to expand the production location Attractiveness of the location for employees


Mercedes-Benz U.S. International, Inc. Porsche Leipzig GmbH

Product: Mercedes-Benz M-Class (SUV)

Capacity: 80.000 units/year

Mayn supplier in the vicinity of the plant

over 50% of the M-Class productionfor the US market

Product: Porsche Cayenne (SUV)

Capacity: 23.000 units/year

Cooperation partner in the vicinity of200 km

Approx. 50% of total sales in the USContradiction ?

Leipzig, Deutschland vs. Tuscaloosa, USA –Who has the right location strategy for the production of a SUV?“Where” – plant planning of Porsche and DaimlerChrysler



Processing of raw materials

Pre-commissioning

Part manufacturing

Componentmounting

Final assembly

Value chain

Part manufacturing

Componentmounting

Final assembly

Value chain

Final assembly

Value chain

Value creation in the enterprise



Strategy for vertical range of manufacture

Strategic parameter “Who”


Massive vertical Integration (Purchase of a sawmill, rubber tree plantation)

Vertical range of manufacture approx. of 20% (Industry average at OEMs approx. of 30 - 40%)

System integrator


The strategy of the vertical range of manufacture provides decisions for “Make-or-Buy” and the way of supplier cooperation“Who” – Outsourcing and forms of cooperation


Make or Buy – Advantages and disadvantages of outsourcing

Decrease of capital commitment Optimization of the cost structure Increase of flexibilityFocus on core business Reduction of entrepreneurial risk

- Risk of employment - Risk of Investment Dependence on suppliers (Contract design)Loss of scope of decision/alternatives/

competence Dependence on technologyLoss of know-howProblems of coordination -> logistics

Forms of cooperation concerning outsourcing

Sole contractual relationsComplete integration System partnershipHybrid solutions (e.g., industry parks)

Cho

ice

“out

sour

cing

”


3rd tier Supplier

2nd tier Supplier

1st tier Supplier

OEM OEM

Component and part supplier

System specialist,assemblies suppliers

Module developer System integrator

The supplier pyramid is subject to a continuous change

“Who” – Supplier structure traditional vs. current



The term 0,5-tier Supplier has evolved to characterize the system supplier

“Who” – Scope of competence of the supplier

Source: Magna Steyr

Tech

nolo

gica

l int

egra

tion

com

pete

nce

Production-related integration competence

Additional requirements

Component and part supplier

System specialist Module supplier

Systemintegrator

Material and process specific innovation

Specializedsystem development

across OEM standards

Responsible for life cycle

Assembly andJIT-supply

System integrators of the automotive industry

Supplier management System integration Quality managementWarranty Complexity management


With the ramp-up of the Panamera, the production depth of the Leipzig plant rises from 6% to 15% – the logistics scope increases considerably

* CO estimate; no official figures provided** Source: Porsche Leipzig GmbH

Installed scopes (Extract)

Involved production sites

Panamera

Cayenne VW Bratislava VW Bratislava Porsche Leipzig Approx. 6%*

Production stages

Body shell Painted components

Disks Exhaust Cockpit Lights

Power trainWheels Interior (reMayning

scope)

Stage 1 (Body shop/Paint

shop)

Stage 2(Assembly)

Stage 3(Finish)

Production depth at Leipzig plant

VW Hannover Porsche Leipzig Porsche Leipzig Approx. 15%**



A company´s performance on the market consists of products, services or a combination of both Strategic parameter “What”


Product

Different possibilities of positioning as an product provider Mass vs. niche provider Standard vs. exclusiveLarge differences even among mass providers

Toyota Yaris

150.000 vehicles per year 3 engine variant 448 different configurations

VW Lupo

120.000 vehicles per year 18 engine variant176.576 different configurations


vs.

An increase of the number of variants and a concurrent delivery time reduction is only possible through a reduction of the through-put-timeStrategic parameter “When”


Customers, who decide to buy a brand-name product, demand following two things:Highest degree of customization Quickest possible delivery

A conflict of interest emerges for the producer how he can response to that demand:

Problem: Customer requestSolution: Production of variants and stock building

Problem: Despite a full stock the product demanded by the costumer may not be availableSolution: The product variant demanded by the customer will only be produced after the incoming order

has been received Problem: Delivery time Solution: Minimization of through-put-time through production process optimization


AssemblyBody/paint

98%Stability of sequence

within productionFixed sequence

of vehiclesVehicleorders

> 3 h

Manufacturing process

Finishedvehicles

Lead-time for supply in planned sequence

Lead-time for supply in actual sequence

Lead-time for mono-material supply

Modul parts

Single parts

> 6 days

> 6 days

The Build - to - Order production system of Porsche based on the pearl - chain principle


Agenda

May 20th, 2011


Agenda:

Lecturer:






17:15 End


Strategic production planning

Def. production program

Def. rough resource requirements

How can the planning be implemented in a resource-saving way operational product management

Inputs Outputs

MaterialsLaborEnergyCapital

Information System

Products

Services

Transformation

Object of the operational production management is the optimal definition of the transformation process “production”


Production planning


High delivery readiness and adherence to delivery dates

High capacityutilization Short through-put-time

Low inventory


Production requirements can be illustrated by a “Polylemma” when quality is predefined Production requirements

INT1101_PRES_110520_2_DAK Vorlesung_Manufacturing_Script.ppt35Porsche ConsultingSource: Porsche Consulting

The production planning is conducted from general to detailed

Three levels of production planning and control

Aggregate sales and production planning

Customer order

Master Production Schedule

Materials Requirements

Planning

Rules for batch size and capacity planning

Raw material request Detailed production plan

Production control

Plan

ninn

gho

rizo

nt

Level 1

Level 2

Level 3





Customer order



Planning



Production control

Plan

ninn

gho

rizo

nt

Level 1

Level 2

Level 3


Planning level temporal spatial factual

Business planning Year/quarter Entire corporation Monetary

Aggragate sales and production planning

Month/week Plant/production segment

Production type, production group

Master-Production-Schedule

Week/day Production segment/machine groups

Products(Variants of products)

Material Requirement Planning

Week/day Machine groups/ machine

Assemblies, com-ponents, raw materials

Production control Day/hour Machine Operation/ process

Aggregation level of the planning information

* according to Heinrich 1989Source: Porsche Consulting

The aggregation level of the planning information continuously decreases with each planning levelAggregation level of production planning*


Procurement Performance of the suppliers Stock capacity

Production Current machine capacity Planning of future capacity Personnel capacity Employment level

Marketing/Distribution Customer requirements Competitive behavior Requirement forecast

Finance Cost data Financial situation of the company

Personnel Labor market situation Employee training

Development New products Construction change


The sales plan is the starting point of the operational production planning

Basis of the sales plan

Aggregate sales andproduction planning

Rough resource andpersonnel planning Program plan for product families


790550Program plan for chair family

200200200200Desk chair

120120Kitchen chair

150150Office chair

87654321

MayApril


The integration of the program planning on the product level reflects the net requirements of each unit per unit of timeProgram plan for product families – Example


000019313538Customer order

3535353530303030Forecast

87654321

MayApril

015000001500Master Production Schedule

811161367110113217Available inventory

3535353530313538Gross requirement

353535353031180Master Production Schedule

000000017Available inventory

3535353530313538Gross requirement

Calculation of the Master Production Schedule using a fixed batch size

Calculation of the Master Production Scheduleusing a variable batch size

Inventory end of March: 55 units


The Master Production Schedule (MPS) will be determined according to the sales planning or rather to customer ordersDerivative of the Master Production Schedule


The batch size is a machine´s production volume between a changeover

As a part of the batch size planning the period-based net requirements are combined into production lots according to economical criteria

For all products that are produced on the same manufacturing facility it has to be determined in how many batches and with which size the total production output of a planning period has to be split up


The production lot depicts a quantitative defined production order

Definition


Fundamental resources for the production process of a company

Raw materials

Components

Components are products that have not reached the final state yet. They are a part of the total product of the production process. Components are partly labeled as assemblies, subassemblies, etc.

Work-in-Progress

Work-in-Progress describes material waiting for manufacturing within the value chain. It includes both components and raw material. Work-in-progress depicts a key performance indicator in order to measure the efficiency of the production control. Especially, the JIT production system strives for a minimal work-in-progress strategy.

Finished goods

Finished goods are final products in the production process


Inventories can be available along the value chain

Inventory types


The vision of zero inventory is corroborated by a lot of arguments

Motivation for stock-keeping

1. Economies of scale

2. Uncertainty- concerning demand - concerning through-put-time (e.g., process stability)- concerning procurement

3. Speculation- concerning highly volatile prices

4. Transport

5. Smoothing- e.g., minimal purchase quantity of the supplier

6. Logistics- e.g., bulk goods and cheap material

7. Cost of inventory management


80%

95%

100%

20% 50% 100%

A B C

Percentage of total part numbers

Perc

enta

ge o

f tot

al in

vent

ory

valu

e


For the reduction of inventory management cost only a small part of the inventory is closely monitored ABC-Analysis


6,910,71,01,142,57,329,70,8

42,572,282,990,297,198,299,2100,0

AABBBCCC

6900107001000110042500730029700800

12345678

Percentage of total value

cumulated percentage category

Consumptiondata MU

Part No. Rank Part No.

57261438

12345678

Sum 100.000


For the reduction of inventory management cost only a small part of the inventory is closely monitoredABC-Analysis: sample calculation


100

cumulated percentage

50

Rank

1 2 3 4 5 6 7 8

0

x

x

x

x

xx

x

x

A-Part B-Part C-Part


For the reduction of inventory management cost only a small part of the inventory is closely monitoredABC-Analysis: sample calculation


For the administration of A- and B-parts inventory “Inventory Management Systems” are applied Parameters of Inventory Management Systems

1. Demanda.) constant vs. variable demandb.) defined vs. random demand

2. Replenishment lead times

3. Actuality of inventory level

4. Excess demand

5. Exchange of inventory





Customer order



Planning



Production control

Plan

ninn

gho

rizo

nt

Level 1

Level 2

Level 3


Requirement forecast Customer orders

Master Produktion Schedule (MPS)

Engineering changeInventory transactions

Materials Requirements Planning

Available inventoryOpen purchase ordersBatch sizeDLZSecurity stocks

Purchase order Work order Orders of the rescheduling

Inventory data Part lists


The MRP-algorithm breaks the MPS down to single production and purchase orders Materials Requirements Planning


ManufakturPrimary requirement

Requirement of saleable products which is determined through the production planning

ManufakturSecondary requirement

The secondary requirement can be derived from the need of assemblies, components, and raw materials (primary requirement)

Determination of the secondary requirement can be conducted in two ways:

Program controlled requirement calculation MRP-algorithm

Consumption controlled requirement Deduction of requirement calculationfrom historical data

ManufakturTertiary requirements

Requirement of process and operating materials


There are different types of requirements

Types of material requirements


Final product

Assembly 1 RPT: 1 week

Assembly 2 RPT: 2 week

Component 1.1 RPT: 2 week

Subassembly 1.2 RPT: 1 week



Primary requirement

Secondary requirement

Materials Requirement Planning:Deduction of secondary requirements from requirements of primary products


The production structure describes the quantity relation between the components and assemblies of a productProduct structure schematic


Shovel

Production time: 1 Week

Blade

Production time: 4 Week.

Bolts

Production time: 1 Week.

Shovel handle

Production time: 3 Week

1 x 2 x 1 x

A

B C D


The MRP-algorithm makes time dependent net requirement planning possible

MRP based on an example


60608515Net production

5252051010101010Inventory

2015Return due to rework

608010020Ordered shovels

987654321Weeks


0005Inventory

60608515Required blades

12012017030Net inventory

12012017030Requiredbolts


1010153030Inventory

60608515Required shovel handle

ASecurity stock: 5lead time: 1 week

BSecurity stock: 0lead time: 4 weeks

C (2 pieces)Security stock: 0lead time: 1 week

DSecurity stock: 10lead time: 3 weeks


The MRP-algorithm solves the material requirements on the requirements level

Example MRP-algorithm


Despite the logical consistency, the MRP-algorithm has some serious weaknesses

MRP weaknesses

Uncertainty- Concerning the requirement forecast (distribution)- Concerning the through-put-time/replenishment lead times of the single components Reaction: Creation of security stocks

Planning to avoid infinite capacities

Rolling planning horizon

System „Nervousness“- Adjustment of the requirement forecast- Delay in delivery - Machine break downs and staff shortage

Constant, i.e. batch size independent replenishment lead times

Instabilities in the process security not considered volatile output





Customer order



Planning



Production control

Plan

ninn

gho

rizo

nt

Level 1

Level 2

Level 3


Planned production orders Workplace through-put-times

Through-put scheduling

Supply of capacity

Capacity scheduling

Opened production orders


The MRP-algorithm does not determine the date nor the capacity for the order execution Date and capacity planning


Types of networks

PERT MPM CPM

Process: n/aEvents: node

Process: nodeEvents: n/a

Process: arcEvents: node

Process

Event Event Event Event

Programm Evaluation and Review Technique

Metra-Potential-Method

Critical Path Method


Different methods of the network plan analysis are applied to optimize the through-putNetwork plan analysis

Process Process


Sequence:

i j k

SEZjSAZjD

FEZjFAZjj

Rules:

From left to right:

- FAZj = max i Element von P(j) {FAZj+ tij}

- FEZj = FAZj + Dj

- FAZ1 = SAZ1

From right to left:

- SAZj = min i Element von S(j) {SAZi – tij}

- SEZj = SAZj +Dj

- FEZn = SEZn

Variables:- j: Process number

- Dj:Duration of the process j

- P(j):Predecessor of j

- S(j):Succesor of j

-FAZj: earliest possible starting date of j

-FEZj: earliest possible ending date of j

-SAZj: latest possible starting date of j

-SEZj: latest possible ending date of j

Tjk

-Tjk: Time from the beginning of the process j till the beginning of the following process k; tjk can be smaller than Dj


The scheduling for a production process can be accomplished through the MPMnetwork plan technique Definition MPM network plan


Based on information of the individual manufacturing steps…

Scheduling in the MPM network plan

-tAB = 10tBC = 10tAD = 10tDE = 8tBF = 20; tDF = 7tCG = 40; tEG = 30; tFC = 18

-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG

Duration of the processPredecessorDProcess


… the basic network structure is determined


A F G0 10

10

01810

B C

20 40

30

D

E

30

10

10

20

7

8

40

18

30


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG


SEZjSAZjD

FEZjFAZjj

Network plan elements

Rules:

From left to right:


- FEZj = FAZj + Dj

- FAZ1 = SAZ1


Forward scheduling determined the earliest starting and end points (FAZ and FEZ)-in accordance with defined rulesScheduling in the MPM network plan

A F G0 10

10

60 60

01810

B C10 30

20 40

10 40

30

D

E

30

10

10

20

7

8

40

18

30

Forward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG


SEZjSAZjD

FEZjFAZjj


Rules:

From left to right:


- FEZj = FAZj + Dj

- FAZ1 = SAZ1



A F G0 10 30

10

01810

B C10 30

20 40

10 40

30

D

E 18

30

10

10

20

7

8

40

18

30

Forward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG


SEZjSAZjD

FEZjFAZjj


Rules:

From left to right:


- FEZj = FAZj + Dj

- FAZ1 = SAZ1



A F G0 10 30

10

48 60 60

01810

B C10 30 20 60

20 40

10 40

30

D

E 18 48

30

10

10

20

7

8

40

18

30

Forward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG


SEZjSAZjD

FEZjFAZjj


Rules:

From left to right:


- FEZj = FAZj + Dj

- FAZ1 = SAZ1


A F G0 10 30

10

48 60 60

606001810

B C10 30 20 60

20 40

10 40

30

D

E 18 48

30

6042

6020

30 60

10

10

20

7

8

40

18

30

Backward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG



Backward scheduling determines the latest start and end points (SAZ and SEZ)


SEZjSAZjD

FEZjFAZjj


Rules:

From right to left:


- SEZj = SAZj +Dj

- FEZn = SEZn


A F G0 10 30

10

48 60 60

606001810

B C10 30 20 60

20 40

10 40

30

10 30

D

E 18 48

30

6042

6020

30 60

10

10

20

7

8

40

18

30

Backward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG





SEZjSAZjD

FEZjFAZjj


Rules:

From right to left:


- SEZj = SAZj +Dj

- FEZn = SEZn


A F G0 10 30

10

48 60 60

606001810 0 10

B C10 30 20 60

20 40

10 40

30

10 30

22 52

D

E 18 48

30

6042

6020

30 60

10

10

20

7

8

40

18

30

Backward scheduling


-ABAD

B,DC,E,F

Start: 102040303018

End: 0

ABCDEFG





SEZjSAZjD

FEZjFAZjj


Rules:

From right to left:


- SEZj = SAZj +Dj

- FEZn = SEZn


A F G0 10 30

10

48 60 60

606000 60421810 10

B C10 30 20 60

20 10 30 40 6020

10 40

30 22 52

D

E 18 48

30 30 60

10

10

20

7

8

40

18

30


The delay of a process on the critical path (FAZ=SAZ and FEZ=SEZ) leads to a delay of the entire manufacturing process, because there are no buffersCritical path in a network plan

The critical path is a path which determines the date of product completion/duration of project The extension of a process along the critical path leads to a shift of the end date of the total production process The critical paths used for the MPM network plan technique are characterized that FAZ and SAZ, or rather FEZ and SEZ

correspond with each other Non-critical paths contain buffers, i.e., single processes may last longer to some extent without becoming critical paths


Planned production orders Workplace through-put-times

Through-put scheduling

Supply of capacity

Capacity scheduling

Opened production orders


Based on the through-put scheduling the synchronization of the target date with available capacities is accomplishedProduction control


306 12 18 24 36 42 48 54 600

Buffer

Buffer

Buffer

T/TU

A

B

D

C

E

F

G


The Gantt diagram visualizes the buffers in a production network

Gantt diagram


306 12 18 24 36 42 48 54 600

24

68

10

AB

D C

C

E

F

Wor

king

hou

rs

Capacity limit

The “capacity mountains” evolve from the process duration and capacity requirements

Comparison of capacity demand and supply

306 12 18 24 36 42 48 54 600

24

68

10

AB

D C

C

EF

F

Capacity limit

Wor

king

hou

rs

* Predecessor from previous example with estimated capacity expensesSource: Porsche Consulting

When orders are shifted within a time buffer, available capacities can be balanced and adjusted Capacity scheduling with “capacity mountains” *


A capacity determination is accomplished, if order shifts are impossible

Options of the capacity management

Capacity adjustment (change in supply)

Increase: overtime, recruitment , investment

Decrease: short-time work, staff reduction

Capacity synchronization (change in demand)

Increase: additional orders, Mayntenance work, inventory production

Decrease: reject orders, subcontracting, shift of burden





Customer order



Planning



Production control

Plan

ninn

gho

rizo

nt

Level 1

Level 2

Level 3


Different rules are applied to the sequencing of production orders

Sequencing rules

3225

3314

31313

45292

61111

Delivery date (relative)Processing timeOrder No.

The rules mentioned above will be applied to the following order list:

Sequence rules: FCFS (first-come, first-served) SPT (shortest processing time) EDD (earliest due date) CR (critical ratio)


121268Gesamt

4232745

3933724

4031713

045402

061111

DelayDelivery date

(relative)Completion Sequence

Average through-put-time 268/5 = 53,6

Average delay 121/5 = 24,2

Number of delayed deliveries 3


Applying the FCFS rule the orders will be executed after they have been dispatched

First-come, First-Served


43135Gesamt

433174313

04543292

06114111

032325

033114

DelayDelivery date

(relative)Completion Processing timeSequence





Applying the SPT rule orders are dispatched in the production according to increasing processing timeShortest Processing Time


33235Gesamt

136174111

184563292

1333414

1323325

03131313

DelayDelivery date






The order of the processing of purchase orders according to EDD is determined by the target delivery dates Earliest Due Date


87289Gesamt

136174111

31326325

28336114

154560292

03131313

DelayDelivery date






The order of the processing of purchase orders according to critical ratio is determined by considering delivery date, current date and duration Critical ratio

processing ofduration datecurrent dateDelivery Ratio Critical


Agenda

May 20th, 2011


Agenda:

Lecturer:






17:15 End


In contrast to “traditional thinking”, “Lean Production” starts by looking at throughput timesThe approach: Short throughput times instead of high inventory levels

“Traditional thinking” “Lean Production”

High inventory levels Short throughput times

Maximum ability to deliver Maximum ability to react

High customerorientation

High customerorientation



Example

A short throughput time is obtained by reducing all the elements in the process chain that add no valueReducing activities with no added value

Previously Now

Throughput time = 180 min. Throughput time = 120 min.

Value added No value added Value added No value added

Weld on nutPick up material

Place part in fixtureSpot welding,

applying sealantRemove material(28 items) from conveyor belt; place part in fixtureSpot welding

Remove material(60 items) from conveyor belt; place part in fixture

Weld on stud bolt

Buffer stock of material

Action:Work contents

combined in a new sequence and distribution (total reMaynsthe same)

Action: Automatic

loading Conveyor belts

shortened, so that bufferstocks have tobe reduced as well

120 min.SS 60 min. 60 min.SS 60 min.



Critical questions have to be asked in order to identify elements in the production process that add no valueQuestions

How many of the tasks performed are essential for the production process?

How many of the tasks only increase product cost instead of product value?

How many of the tasks have a genuine bearing on what customers

Everything, that is not value-adding,

is waste!



Value-adding activities only account for a small proportion of the work process

Breakdown of the work process

Work process

Value-adding

Not value-adding with obvious waste

Not value-adding withhidden waste

Value-adding

Activities that add tothe value of the productActivities for which the

customer is preparedto pay



Some forms of waste are immediately obvious ...


Work process

Value-adding




Obvious waste

Activities that are definitely not requiredto add value to the product

Has to be eliminated, e.g. scrap, rework,

inventory, waiting time


... other forms of waste are hidden


Work process

Hidden waste

Work that does notadd to the product’s value but which may be required under certain circumstances

Can only be reduced, e.g. changeover,

transport time, movement time (without product)




Value-adding


There are three areas that can be examined to eliminate waste in the manufacturing processTypes of waste

* The Japanese word for waste is MUDASource: Porsche Consulting

7 types of waste*

In the manufacturing process

In the product

In the machinery/equipment

1 Overproduction

2 Inventory

3 Transport

4 Waiting time

5 Space/surface area

6 Rework/defects

7 Movement time

Areas for eliminating waste


Produced products that are not required by the following process cause waste in the production area Types of waste

Space/surface area

Rework/defects

Movement time

Inventory

Waiting time

Transport

Overproduction



Porsche vehicle assembly „before“Porsche vehicle assembly „before“


The only effective method of reducing waste is to eliminate the apparent safety

Reducing inventory in small steps

Problems are hidden

ExamplesMachine failuresMissing materials/partsBottlenecks in productionQuality problems

Problems become obvious

Easy problem identificationForced to find a quick

solution

Causes can be eliminated

Solving root causes to these problems enables production to run with lower inventory

Problems

Inventory (WIP)

Problems


Problems

INT1101_PRES_110520_2_DAK Vorlesung_Manufacturing_Script.ppt89Porsche ConsultingQuelle: Porsche AG

INT1101_PRES_110520_2_DAK Vorlesung_Manufacturing_Script.ppt90Porsche ConsultingQuelle: Porsche AG


The proportion of added-value tasks is not increased by performance increase levels but by eliminating waste in the processEliminating waste versus performance increase

Performance increase = Compressing the value adding process

Improvement = Replacing waste with value adding tasks

Addedvalue

Waste

A

A

W

A

A

W

Addedvalue

Waste W

A

WW

A

A



> 70% reduction in assembly time

Source: Porsche AG

25%

50%

75%

100%

92 93 94 95 96 97 98 99 00 01 02 03 04 05

Model change964 993

Model change993 996

-71%

Year06 07 08

Model change996 997

Porsche 911 manufacturing hours

91


The just-in-time vision clearly states how production has to function

Just-in-time vision – 5R

Just in time – 5R

The right part …

Zero defects… of the right quality

Now… at the right moment

One part… in the right quantity

Here… in the right place



Lean Production is based on four principles

The just-in-time framework

Flowprinciple

Taktprinciple

Pull principle

Zero-defects principle

Just-in-time production system



Ideally, Lean Production is implemented in a given order

Ideal approach

Flowprinciple

Taktprinciple

Pull principle



Realization of production flow by process couplingand realignment

Improving and stabilizing all processes within the company

The downstream process only takesthe parts it requires

Achieving rhythm by leveling the work contents

Goal

1 2 3 4



The guiding process vision is based on four principles

Supplier

Supplier

Value Add• 15% Porsche• 85% Suppliers

Principles• Pull• Takt• Flow• Zero-Defects

Source: Porsche AG


All principles have to be developed uniformly

The just-in-time framework

Flowprinciple

Taktprinciple

Pull principle





KAIZEN describes the path leading to “just-in-time production system”

KAIZEN versus “just-in-time production system”

Just-in-timeproduction system

KAIZEN



KAIZEN means “to continuously improve”

The meaning of KAIZEN

KAI = change

KAIZEN = A “change for the

better”

ZEN = good (for the better)



KAIZEN pursues the path towards “continuous improvement” in small steps

Paths toward improvement

Innovative improvements in major steps

InnovationLengthy planning period neededHigh investment outlayEmployees not closely involvedMajor steps/changes (irreversible)Target often not achieved

Continuous improvementsin small steps

KAIZENOnly short planning period neededLow investment (or none) Intensive cooperation with employeesSmall steps (can be modified at any time)Continuous progress towards a target

Improve-ment

Time

Improve-ment

Time



Development of produced units and employees since the early nineties of Porsche AGPorsche productivity gain

Source: Porsche AG, Annual Reports

Fiscal year

89.123

105.162101.844102.602

55.782

45.119

32.390

20.79119.34823.234

27.525

12.72212.65212.20211.57111.38410.69910.1439.7529.3208.7128.1517.9597.1076.8476.9707.1338.4319.005

0

20.000

40.000

60.000

80.000

100.000

120.000

92/93 93/94 94/95

20.242

95/96 96/97

38.007

97/98 98/99

48.815

99/00 00/01

55.050

01/02

73.284

02/03

81.531

11.668*

03/04

90.954

11.878*

04/05 05/06 09/1090/91 91/92

15.082

06/07 07/08

76.739

08/09

Produced Units

Employees


Agenda

May 20th, 2011


Agenda:

Lecturer:






17:15 End

Documents

BMA Business, Management and Administration · Business, Management and Administration ... Script.ppt Porsche Consulting Source: BCG ... Script.ppt Porsche Consulting The matrix organization