Production Management Report

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A

REPORT

ON

PRODUCTION MANAGEMENT

SUBMITTED

IN PARTIAL FULFILLMENT

FOR THE AWARD OF THE DEGREE OF

BACHELOR OF TECHNOLOGYIN

DEPARTMENT OF ELECTRONICS & COMMUNICATION

ENGINEERING

Submitted to: - Submitted by: -

Ms. Kiran Raghuvanshi, Dhruvin Shukla,

Lect., CSE Dept. B.Tech. VIII sem.

DEPARTMENT OF ELECTRONICS & COMMUNICATION ENGINEERING

MARUDHAR ENGINEERING COLLEGE, BIKANER

RAJASTHAN TECHNICAL UNIVERSITY2011-12


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PREFACE

Production/operations management is the process, which combines and transforms various

resources used in the production/operations subsystem of the organization into value added

product/services in a controlled manner as per the policies of the organization. Therefore, it is

that part of an organization, which is concerned with the transformation of a range of inputs

into the required (products/services) having the requisite quality level.

The set of interrelated management activities, which are involved in manufacturing certain

products, is called as production management. If the same concept is extended to services

management, then the corresponding set of management activities is called as operations

management.


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Contents

S.No. Chapter Page No.

1. INTRODUCTION 01

2. CONCEPT OF PRODUCTION 03

3. PRODUCTION SYSTEM 05

4. CLASSIFICATION OF PRODUCTION SYSTEM 05

5. PRODUCTION MANAGEMENT 11

6. OPERATING SYSTEM 12

7. OPERATIONS MANAGEMENT 14

8. MANAGING GLOBAL OPERATIONS 18

9. SCOPE OF PRODUCTION AND OPERATIONS 20

10. QUALITY CONTROL 24

11. KANBAN 29

12. JIT 39


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Production management

INTRODUCTION

Production/operations management is the process, which combines and transforms various

resources used in the production/operations subsystem of the organization into value added

product/services in a controlled manner as per the policies of the organization. Therefore, it is

that part of an organization, which is concerned with the transformation of a range of inputs

into the required (products/services) having the requisite quality level.

The set of interrelated management activities, which are involved in manufacturing certain

products, is called as production management. If the same concept is extended to servicesmanagement, then the corresponding set of management activities is called as operations

management.

HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS

MANAGEMENT

For over two centuries operations and production management has been recognised as an

important factor in a countrys economic growth.

The traditional view of manufacturing management began in eighteenth century when Adam

Smith recognised the economic benefits of specialisation of labour. He recommended

breaking of jobs down into subtasks and recognises workers to specialised tasks in which

they wouldbecome highly skilled and efficient. In the early twentieth century, F.W. Taylor

implemented Smiths theories and developed scientific management. From then till 1930,

many techniqueswere developed prevailing the traditional view. Brief information about the

contributions tomanufacturing management is shown in the Table 1.1.

TABLE 1.1 Historical summary of operations management


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Date Contribution Contributor

1776 Specialization of labour in manufacturing Adam Smith

1799 Interchangeable parts, cost accounting Eli Whitney and others

1832 Division of labour by skill; assignment of jobs

by skill; basics of time study

Charles Babbage

1900 Scientific management time study and work

study developed; dividing planning and doing

of work

Frederick W. Taylor

1900 Motion of study of jobs Frank B. Gilbreth

1901 Scheduling techniques for employees,

machines jobs in manufacturing

Henry L. Gantt

1915 Economic lot sizes for inventory control F.W. Harris

1927 Human relations; the Hawthorne studies Elton Mayo

1931 Statistical inference applied to product quality:

quality control charts

W.A. Shewart

1935 Statistical sampling applied to quality control:

inspection sampling plans

H.F. Dodge & H.G. Roming

1940 Operations research applications in World WarII

P.M. Blacker and others.

1946 Digital computer John Mauchlly and

J.P. Eckert

1947 Linear programming G.B. Dantzig, Williams &

others

1950 Mathematical programming, on-linear and

stochastic processes

A. Charnes, W.W. Cooper &

others

1951 Commercial digital computer: large-scale

computations available.

Sperry Univac

1960 Organizational behaviour: continued study of

people at work

L. Cummings, L. Porter

1970 Integrating operations into overall strategy and

policy, Computer applications to

manufacturing, Scheduling and control,

Material requirement planning (MRP)

W. Skinner J. Orlicky and G.

Wright


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1980 Quality and productivity applications from

Japan: robotics, CAD-CAM

W.E. Deming and

J. Juran.

Production management becomes the acceptable term from 1930s to 1950s. As F.W.

Taylors works become more widely known, managers developed techniques that focused on

economic efficiency in manufacturing. Workers were studied in great detail to eliminate

wasteful efforts and achieve greater efficiency. At the same time, psychologists, socialists

and other social scientists began to study people and human behaviour in the working

environment. In addition, economists, mathematicians, and computer socialists contributed

newer, more sophisticated analytical approaches.

With the 1970s emerges two distinct changes in our views. The most obvious of these,

reflected in the new name operations management was a shift in the service and

manufacturing sectors of the economy. As service sector became more prominent, the change

from production to operations emphasized the broadening of our field to service

organizations. The second, more suitable change was the beginning of an emphasis on

synthesis, rather than just analysis, in management practices.

CONCEPT OF PRODUCTION

Production function is that part of an organization, which is concerned with the

transformation of a range of inputs into the required outputs (products) having the requisite

quality level.

Production is defined as the step-by-step conversion of one form of material into another

form through chemical or mechanical process to create or enhance the utility of the product

to the user. Thus production is a value addition process. At each stage ofprocessing, there

will be value addition.

Edwood Buffa defines production as a process by which goods and services are created.

Some examples of production are: manufacturing custom-made products like, boilers with a

specific capacity, constructing flats, some structural fabrication works for selected customers,


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etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television,

etc.

PRODUCTION SYSTEM


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The production system of an organization is that part, which produces products of an

organization. It is that activity whereby resources, flowing within a defined system, are

combined and transformed in a controlled manner to add value in accordance with the

policies communicated by management. A simplified production system is shown above.

The production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to control and improve

system performance.

Classification of Production System

Production systems can be classified as Job Shop, Batch, Mass and Continuous Production

systems.

JOB SHOP PRODUCTION


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Job shop production are characterised by manufacturing of one or few quantity of products

designed and produced as per the specification of customers within prefixed time and cost.

The distinguishing feature of this is low volume and high variety of products.

A job shop comprises of general purpose machines arranged into different departments. Each

job demands unique technological requirements, demands processing on machines in a

certain sequence.

Characteristics

The Job-shop production system is followed when there is:

1. High variety of products and low volume.

2. Use of general purpose machines and facilities.

3. Highly skilled operators who can take up each job as a challenge because of uniqueness.

4. Large inventory of materials, tools, parts.

5. Detailed planning is essential for sequencing the requirements of each product, capacities

for each work centre and order priorities.

Advantages

Following are the advantages of job shop production:

1. Because of general purpose machines and facilities variety of products can be produced.

2. Operators will become more skilled and competent, as each job gives them learning

opportunities.

3. Full potential of operators can be utilised.

4. Opportunity exists for creative methods and innovative ideas.

Limitations

Following are the limitations of job shop production:


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1. Higher cost due to frequent set up changes.

2. Higher level of inventory at all levels and hence higher inventory cost.

3. Production planning is complicated.

4. Larger space requirements.

BATCH PRODUCTION

Batch production is defined by American Production and Inventory Control Society (APICS)

as a form of manufacturing in which the job passes through the functional departments in

lots or batches and each lot may have a different routing. It is characterised by themanufacture of limited number of products produced at regular intervals and stocked

awaiting sales.

Characteristics

Batch production system is used under the following circumstances:

1. When there is shorter production runs.

2. When plant and machinery are flexible.

3. When plant and machinery set up is used for the production of item in a batch and change

of set up is required for processing the next batch.

4. When manufacturing lead time and cost are lower as compared to job order production.

Advantages

Following are the advantages of batch production:

1. Better utilisation of plant and machinery.

2. Promotes functional specialisation.

3. Cost per unit is lower as compared to job order production.

4. Lower investment in plant and machinery.5. Flexibility to accommodate and process number of products.


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6. Job satisfaction exists for operators.

Limitations

Following are the limitations of batch production:

1. Material handling is complex because of irregular and longer flows.

2. Production planning and control is complex.

3. Work in process inventory is higher compared to continuous production.

4. Higher set up costs due to frequent changes in set up.

MASS PRODUCTION

Manufacture of discrete parts or assemblies using a continuous process are called mass

production. This production system is justified by very large volume of production. The

machines are arranged in a line or product layout. Product and process standardisation exists

and all outputs follow the same path.

Characteristics

Mass production is used under the following circumstances:

1. Standardisation of product and process sequence.

2. Dedicated special purpose machines having higher production capacities and output rates.

3. Large volume of products.

4. Shorter cycle time of production.

5. Lower in process inventory.

6. Perfectly balanced production lines.

7. Flow of materials, components and parts is continuous and without any back tracking.

8. Production planning and control is easy.

9. Material handling can be completely automatic.


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Advantages

Following are the advantages of mass production:

1. Higher rate of production with reduced cycle time.

2. Higher capacity utilisation due to line balancing.

3. Less skilled operators are required.

4. Low process inventory.

5. Manufacturing cost per unit is low.

Limitations

Following are the limitations of mass production:

1. Breakdown of one machine will stop an entire production line.

2. Line layout needs major change with the changes in the product design.

3. High investment in production facilities.

4. The cycle time is determined by the slowest operation.

CONTINUOUS PRODUCTION

Production facilities are arranged as per the sequence of production operations from the first

operations to the finished product. The items are made to flow through the sequence of

operations through material handling devices such as conveyors, transfer devices, etc.

Characteristics

Continuous production is used under the following circumstances:


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1. Dedicated plant and equipment with zero flexibility.

2. Material handling is fully automated.

3. Process follows a predetermined sequence of operations.

4. Component materials cannot be readily identified with final product.

5. Planning and scheduling is a routine action.

Advantages

Following are the advantages of continuous production:

1. Standardisation of product and process sequence.

2. Higher rate of production with reduced cycle time.

3. Higher capacity utilisation due to line balancing.

4. Manpower is not required for material handling as it is completely automatic.

5. Person with limited skills can be used on the production line.

6. Unit cost is lower due to high volume of production.

Limitations

Following are the limitations of continuous production:

1. Flexibility to accommodate and process number of products does not exist.

2. Very high investment for setting flow lines.

3. Product differentiation is limited.

PRODUCTION MANAGEMENT


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Production management is a process of planning, organizing, directing and controlling the

activities of the production function. It combines and transforms various resources used in the

production subsystem of the organization into value added product in a controlled manner as

per the policies of the organization.

E.S. Buffa defines production management as, Production management deals with

decision making related to production processes so that the resulting goods or services are

produced according to specifications, in the amount and by the schedule demanded and out

of minimum cost.

Objectives of Production Management

The objective of the production management is to produce goods services of right quality

and quantity at the right time and right manufacturing cost.

1. RIGHT QUALITY

The quality of product is established based upon the customers needs. The rightquality is not necessarily best quality. It is determined by the cost of the product and

the technical characteristic as suited to the specific requirements.

2. RIGHT QUANTITYThe manufacturing organization should produce the products in right number. If they

are produced in excess of demand the capital will block up in the form of inventory

and if the quantity is produced in short of demand, leads to shortage of products.

3. RIGHT TIME


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Timeliness of delivery is one of the important parameter to judge the effectiveness of

production department. So, the production department has to make the optimal

utilization of input resources to achieve its objective.

4. RIGHT MANUFACTURING COSTManufacturing costs are established before the product is actually manufactured.

Hence, all attempts should be made to produce the products at pre-established cost, so

as to reduce the variation between actual and the standard (pre-established) cost.

OPERATING SYSTEM

Operating system converts inputs in order to provide outputs which are required by a

customer. It converts physical resources into outputs, the function of which is to satisfy

customer wants i.e., to provide some utility for the customer. In some of the organization the

product is a physical good (hotels) while in others it is a service (hospitals). Bus and taxi

services, tailors, hospital and builders are the examples of an operating system.

Everett E. Adam & Ronald J. Ebert define operating system as, An operating system (

function) of an organization is the part of an organization that produces the organizations

physical goods and services.

Ray Wilddefines operating system as, An operating system is a configuration of resources

combined for the provision of goods or services.

Concept of Operations

An operation is defined in terms of the mission it serves for the organization, technology it

employs and the human and managerial processes it involves. Operations in an organization

can be categorized into manufacturing operations and service operations. Manufacturing

operations is a conversion process that includes manufacturing yields a tangible output: a


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product, whereas, a conversion process that includes service yields an intangible output: a

deed, a performance, an effort.

Distinction between Manufacturing Operations and Service Operations

Following characteristics can be considered for distinguishing manufacturing operations with

service operations:

1. Tangible/Intangible nature of output

2. Consumption of output

3. Nature of work (job)

4. Degree of customer contact

5. Customer participation in conversion

6. Measurement of performance.

Manufacturing is characterised by tangible outputs (products), outputs that customers

consume overtime, jobs that use less labour and more equipment, little customer contact, no

customer participation in the conversion process (in production), and sophisticated methods

for measuring production activities and resource consumption as product are made.

Service is characterised by intangible outputs, outputs that customers consumes immediately,

jobs that use more labour and less equipment, direct consumer contact, frequent customer

participation in the conversion process, and elementary methods for measuring conversion

activities and resource consumption. Some services are equipment based namely rail-road

services, telephone services and some are people based namely tax consultant services, hair

styling.

OPERATIONS MANAGEMENT


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A Framework for Managing Operations

Managing operations can be enclosed in a frame of general management function as shown in

Fig. 1.3. Operation managers are concerned with planning, organizing, and controlling the

activities which affect human behaviour through models.

PLANNING

Activities that establishes a course of action and guide future decision-making is planning.

The operations manager defines the objectives for the operations subsystem of the

organization, and the policies, and procedures for achieving the objectives. This stage

includes clarifying the role and focus of operations in the organizations overall strategy. It

also involves product planning, facility designing and using the conversion process.

ORGANIZING

Activities that establishes a structure of tasks and authority. Operation managers establish a

structure of roles and the flow of information within the operations subsystem. They

determine the activities required to achieve the goals and assign authority and responsibility

for carrying them out.

CONTROLLING

Activities that assure the actual performance in accordance with planned performance. To

ensure that the plans for the operations subsystems are accomplished, the operations manager

must exercise control by measuring actual outputs and comparing them to planned operations

management. Controlling costs, quality, and schedules are the important functions here.

BEHAVIOUR


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Operation managers are concerned with how their efforts to plan, organize, and control affect

human behaviour. They also want to know how the behaviour of subordinates can affect

managements planning, organizing, and controlling actions. Their interest lies in decision-making behaviour.

MODELS

As operation managers plan, organise, and control the conversion process, they encounter

many problems and must make many decisions. They can simplify their difficulties using

models like aggregate planning models for examining how best to use existing capacity in

short-term, break even analysis to identify break even volumes, linear programming and

computer simulation for capacity utilisation, decision tree analysis for long-term capacity

problem of facility expansion, simple median model for determining best locations of

facilities etc.

Objectives of Operations Management


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Objectives of operations management can be categorised into customer service and resource

utilisation.

CUSTOMER SERVICE

The first objective of operating systems is the customer serivce to the satisfaction of customer

wants. Therefore, customer service is a key objective of operations management. The

operating system must provide something to a specification which can satisfy the customer in

terms of cost and timing. Thus, primary objective can be satisfied by providing the right

thing at a right price at the right time.

These aspects of customer servicespecification, cost and timingare described for four

functions in Table 1.2. They are the principal sources of customer satisfaction and must,

therefore, be the principal dimension of the customer service objective for operations

managers.

Generally an organization will aim reliably and consistently to achieve certain standards andoperations manager will be influential in attempting to achieve these standards. Hence, this

objective will influence the operations managers decisions to achieve the required customer

service.

RESOURCE UTILISATION

Another major objective of operating systems is to utilise resources for the satisfaction of

customer wants effectively, i.e., customer service must be provided with the achievement of

effective operations through efficient use of resources. Inefficient use of resources or

inadequate customer service leads to commercial failure of an operating system.

Operations management is concerned essentially with the utilisation of resources, i.e.,

obtaining maximum effect from resources or minimising their loss, under utilisation or waste.

The extent of the utilisation of the resources potential might be expressed in terms of theproportion of available time used or occupied, space utilisation, levels of activity, etc. Each


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measure indicates the extent to which the potential or capacity of such resources is utilised.

This is referred as the objective of resource utilisation.

Operations management is also concerned with the achievement of both satisfactory customer

service and resource utilisation. An improvement in one will often give rise to deterioration

in the other. Often both cannot be maximised, and hence a satisfactory performance must be

achieved on both objectives. All the activities of operations management must be tackled

with these two objectives in mind, and many of the problems will be faced by operations

managers because of this conflict. Hence, operations managers must attempt to balance these

basic objectives.

Table 1.3 summarises the twin objectives of operations management. The type of balance

established both between and within these basic objectives will be influenced by market

considerations, competitions, the strengths and weaknesses of the organization, etc. Hence,

the operations managers should make a contribution when these objectives are set.

TABLE 1.3 The twin objectives of operations management

The customer service objective. The resource utilisation objective.

To provide agreed/adequate levels of customer

service (and hence customer satisfaction) by

providing goods or services with the right

specification, at the right cost and at the right

time.

To achieve adequate levels of resource

utilisation (or productivity) e.g., to achieve

agreed levels of utilisation of materials,

machines and labour.


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TABLE 1.2 Aspects of customer service

Principal

functionPrimary considerations Other considerations

Manufacture Goods of a given, requested or

acceptable specification

Cost, i.e., purchase price or cost of

obtaining goods.

Timing, i.e., delivery delay from

order or request

to receipt of goods.

Transport Management of a given, requested or


Cost, i.e., cost of movements.

Timing, i.e.,

1. Duration or time to move.

2. Wait or delay from requesting to

its commencement.

Supply Goods of a given, requested or


Cost, i.e., purchase price or cost of

obtaining goods.

Timing, i.e., delivery delay from

order or request

to receipt of goods.

Service Service Treatment of a given,

requested or acceptable specification

Cost, i.e., cost of movements.

Timing, i.e.,

1. Duration or time required for

treatment.

2. Wait or delay from requesting

treatment to

its commencement.

MANAGING GLOBAL OPERATIONS

The term globalization describes businesses deployment of facilities and operations around

the world. Globalization can be defined as a process in which geographic distance becomes a


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factor of diminishing importance in the establishment and maintenance of cross border

economic, political and socio-cultural relations. It can also be defined as worldwide drive

toward a globalized economic system dominated by supranational corporate trade and

banking institutions that are not accountable to democratic processes or national

governments.

There are four developments, which have spurred the trend toward globalization. These are:

1. Improved transportation and communication technologies;

2. Opened financial systems;

3. Increased demand for imports; and

4. Reduced import quotas and other trade barriers.

When a firm sets up facilities abroad it involve some added complexities in its operation.

Global markets impose new standards on quality and time. Managers should not think about

domestic markets first and then global markets later, rather it could be think globally and act

locally. Also, they must have a good understanding of their competitors. Some other

important challenges of managing multinational operations include other languages and

customs, different management style, unfamiliar laws and regulations, and different costs.

Managing global operations would focus on the following key issues:

To acquire and properly utilize the following concepts and those related to globaloperations, supply chain, logistics, etc.

To associate global historical events to key drivers in global operations from differentperspectives.

To develop criteria for conceptualization and evaluation of different globaloperations.

To associate success and failure cases of global operations to political, social,economical and technological environments.

To envision trends in global operations. To develop an understanding of the world vision regardless of their country of origin,

residence or studies in a respectful way of perspectives of people from different races,


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studies, preferences, religion, politic affiliation, place of origin, etc.

SCOPE OF PRODUCTION AND OPERATIONS

MANAGEMENT

Production and operations management concern with the conversion of inputs into outputs,

using physical resources, so as to provide the desired utilities to the customer while meeting

the other organizational objectives of effectiveness, efficiency and adoptability. It

distinguishes itself from other functions such as personnel, marketing, finance, etc., by its

primary concern for conversionby using physical resources. Following are the activities

which are listed under production and operations management functions:

1. Location of facilities

2. Plant layouts and material handling

3. Product design

4. Process design

5. Production and planning control

6. Quality control

7. Materials management

8. Maintenance management.

LOCATION OF FACILITIES

Location of facilities for operations is a long-term capacity decision which involves a long

term commitment about the geographically static factors that affect a business organization. It

is an important strategic level decision-making for an organization. It deals with the questions

such as where our main operations should be based?

The selection of location is a key-decision as large investment is made in building plant and

machinery. An improper location of plant may lead to waste of all the investments made in

plant and machinery equipments. Hence, location of plant should be based on the companys

expansion plan and policy, diversification plan for the products, changing sources of raw


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materials and many other factors. The purpose of the location study is to find the optimal

location that will results in the greatest advantage to the organization.

PLANT LAYOUT AND MATERIAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is the configuration of

departments, work centres and equipment in the conversion process. The overall objective of

the plant layout is to design a physical arrangement that meets the required output quality and

quantity most economically.

According toJames Moore, Plant layout is a plan of an optimum arrangement of facilities

including personnel, operating equipment, storage space, material handling equipments and

all other supporting services along with the design of best structure to contain all these

facilities.

Material Handling refers to the moving of materials from the store room to the machine

and from one machine to the next during the process of manufacture. It is also defined as the

art and science of moving, packing and storing of products in any form. It is a specialized

activity for a modern manufacturing concern, with 50 to 75% of the cost of production. This

cost can be reduced by proper section, operation and maintenance of material handling

devices. Material handling devices increases the output, improves quality, speeds up the

deliveries and decreases the cost of production. Hence, material handling is a prime

consideration in the designing new plant and several existing plants.

PRODUCT DESIGN

Product design deals with conversion of ideas into reality. Every business organization have

to design, develop and introduce new products as a survival and growth strategy. Developing

the new products and launching them in the market is the biggest challenge faced by the

organizations. The entire process of need identification to physical manufactures of product

involves three functions: marketing, product development, manufacturing. Product

development translates the needs of customers given by marketing into technical

specifications and designing the various features into the product to these specifications.


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Manufacturing has the responsibility of selecting the processes by which the product can be

manufactured. Product design and development provides link between marketing, customer

needs and expectations and the activities required to manufacture the product.

PROCESS DESIGN

Process design is a macroscopic decision-making of an overall process route for converting

the raw material into finished goods. These decisions encompass the selection of a process,

choice of technology, process flow analysis and layout of the facilities. Hence, the important

decisions in process design are to analyse the workflow for converting raw material into

finished product and to select the workstation for each included in the workflow.

PRODUCTION PLANNING AND CONTROL

Production planning and control can be defined as the process of planning the production in

advance, setting the exact route of each item, fixing the starting and finishing dates for each

item, to give production orders to shops and to follow up the progress of products according

to orders.

The principle of production planning and control lies in the statement First Plan Your Work

and then Work on Your Plan. Main functions of production planning and control includes

planning, routing, scheduling, dispatching and follow-up.

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.

Planning bridges the gap from where we are, to where we want to go. It makes it possible forthings to occur which would not otherwise happen.

Routing may be defined as the selection of path which each part of the product will follow,

which being transformed from raw material to finished products. Routing determines the

most advantageous path to be followed from department to department and machine to

machine till raw material gets its final shape.


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Scheduling determines the programme for the operations. Scheduling may be defined as the

fixation of time and date for each operation as well as it determines the sequence of

operations to be followed.

Dispatching is concerned with the starting the processes. It gives necessary authority so as to

start a particular work, which has already been planned under Routing and Scheduling.

Therefore, dispatching is release of orders and instruction for the starting of production for

any item in acceptance with the route sheet and schedule charts.

The function offollow-up is to report daily the progress of work in each shop in a prescribed

proforma and to investigate the causes of deviations from the planned performance.


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QUALITY CONTROL

Quality Control (QC) may be defined as a system that is used to maintain a desired level of

quality in a product or service. It is a systematic control of various factors that affect the

quality of the product. Quality control aims at prevention of defects at the source, relies on

effective feed back system and corrective action procedure.

Quality control can also be defined as that industrial management technique by means of

which product of uniform acceptable quality is manufactured. It is the entire collection of

activities which ensures that the operation will produce the optimum quality products at

minimum cost.

The main objectives of quality control are:

To improve the companies income by making the production more acceptable to thecustomers i.e., by providing long life, greater usefulness, maintainability, etc.

To reduce companies cost through reduction of losses due to defects. To achieve interchangeability of manufacture in large scale production. To produce optimal quality at reduced price. To ensure satisfaction of customers with productions or services or high quality level,

to build customer goodwill, confidence and reputation of manufacturer.

To make inspection prompt to ensure quality control. To check the variation during manufacturing.

MATERIALS MANAGEMENT

Materials management is that aspect of management function which is primarily concerned

with the acquisition, control and use of materials needed and flow of goods and services

connected with the production process having some predetermined objectives in view.

The main objectives of materials management are:


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To minimise material cost. To purchase, receive, transport and store materials efficiently and to reduce the related

cost.

To cut down costs through simplification, standardisation, value analysis, import

substitution, etc.

To trace new sources of supply and to develop cordial relations with them in order toensure continuous supply at reasonable rates

To reduce investment tied in the inventories for use in other productive purposes andto develop high inventory turnover ratios.

MAINTENANCE MANAGEMENT

In modern industry, equipment and machinery are a very important part of the total

productive effort. Therefore, their idleness or downtime becomes are very expensive. Hence,

it is very important that the plant machinery should be properly maintained.

The main objectives of maintenance management are:

1. To achieve minimum breakdown and to keep the plant in good working condition at the

lowest possible cost.

2. To keep the machines and other facilities in such a condition that permits them to be used

at their optimal capacity without interruption.

3. To ensure the availability of the machines, buildings and services required by other

sections of the factory for the performance of their functions at optimal return on investment.

WEGMANS FOOD MARKETS

Wegmans Food Markets, Inc., is one of the premier grocery chains in the United States.

Headquartered in Rochester, NY, Wegmans operates over 70 stores. The company employs

over23,000 people, and has annual sales of over Rs. 2.0 billion.


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Wegmans has a strong reputation for offering its customers high product quality and

excellent service. Through a combination of market research, trial and error, and listening to

its customers, Wegmans has evolved into a very successful organization. In fact, Wegmans is

so good at what it does that grocery chains all over the country send representatives to

Wegmans for a firsthand look at operations.

SUPERSTORES

Many of the companys stores are giant 100,000 square foot superstores, double or triple the

size of average supermarkets. A superstore typically employs from 500 to 600 people.

Individual stores differ somewhat in terms of actual size and some special features. Aside

from the features normally found in supermarkets, they generally have a large bakery Section

(each store bakes its own bread, rolls, cakes, pies, and pastries), and extra large produce

sections. They also offer film processing a complete pharmacy, a card shop and video rentals.

In-store floral shops range in size up to 800 square feet of space, and offer a wide variety of

fresh-cut flowers, flower arrangements, varies and plants. In-store card shops covers over

1000 square feet of floor of floor space. The bulk foods department provides customers with

the opportunity to select what quantities they desire from a vast array of foodstuffs and some

nonfood items.

Each store is a little different. Among the special features in some stores are a dry cleaning

department, a wokery, and a salad bar. Some feature a Market Cafe that has different food

stations, each devoted to preparing and serving a certain type of food. For example, onestation has pizza and other Italian specialties, and another oriental food. There are also being

a sandwich bar, a salad bar and a dessert station. Customers often wander among stations as

they decide what to order. In several affluent locations, customers can stop in on their way

home from work and choose from a selection of freshly prepared dinner entrees. Some stores

have a coffee shop section with tables and chairs where shoppers can enjoy regular or

specialty coffees and variety of tempting pastries.


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PRODUCE DEPARTMENT

The company prides itself on fresh produce. Produce is replenished as often as 12 times a

day. The larger stores have produce sections that are four to five times the size of a produce

section of an average supermarket. Wegmans offers locally grown produce a season.

Wegmans uses a farm to market system whereby some local growers deliver their produce

directly to individual stores, bypassing the main warehouse. That reduces the companys

inventory holding costs and gets the produce into the stores as quickly as possible. Growers

may use specially designed containers that go right onto the store floor instead of large bins.

This avoids the bruising that often occurs when fruits and vegetables are transferred from

bins to display shelves and the need to devote labor to transfer the produce to shelves.

MEAT DEPARTMENT

In addition to large display cases of both fresh and frozen meat products, many stores have a

full-service butcher shop that offers a variety of fresh meat products and where butchers are

available to provide customized cuts of meat for customers.

ORDERING

Each department handles its own ordering. Although sales records are available from records

of items scanned at the checkouts, they are not used directly for replenishing stock. Other

factors, such as pricing, special promotions, local circumstances must all be taken into

account. However, for seasonal periods, such as holidays, managers often check scanner

records to learn what past demand was during a comparable period.

The superstores typically receive one truckload of goods per day from the main warehouse.

During peak periods, a store may receive two truckloads from the main warehouse. The short

lead-time greatly reduce the length of the time an item might be out of stock, unless the main

warehouse is also out of stock.


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The company exercises strict control over suppliers, insisting on product quality and on-time

deliveries.

EMPLOYEES

The company recognises the value of good employees. It typically invests an average of

Rs.7000 to train each new employee. In addition to learning about stores operations, new

employees learn the importance of good customer service and how to provide it. The

employees are helpful, cheerfully answering customer questions or handling complaints.

Employees are motivated through a combination of compensation, profit sharing, and

benefits.

QUALITY

Quality and Customer satisfaction are utmost in the minds of Wegmans management and its

employees. Private label food items as well as name brands are regularly evaluated in test

kitchens, along with the potential new products. Managers are responsible for checking and

maintaining products and service quality in their departments. Moreover, employees are

encouraged to report problems to their managers.

If a customer is dissatisfied with an item and returns it, or even a portion of the item, the

customer is offered a choice of a replacement or a refund. If the item is a Wegmans brand

food item, it is then sent to the test kitchen to determine the cause of the problem. If the cause

can be determined, corrective action is taken.


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KANBAN

KANBAN is a model of economic production management which is used today by a great

number of well known companies all over the world. Its basic principles were developed a

long time ago by the Toyota group in Japan. The Japanese term KANBAN is interpreted as

a visual card or signal.

The core notion of lean production is the design of a valueadded process as a continuous

flow. However, there are always points in a value stream where continuous flow produc-tion

is not possible and must be replaced by production in lot sizes. The KANBAN system should

be used when cycle times are very long or very short, when workplaces are located at great

distances from each other, or when pro-cesses are highly unreliable.

KANBAN

reduces circulating inventory and finished goods. This, in turn, reduces capital lockupas well as any wasting activities which are associated with stocks;

limits the inventory so that set stocks cannot be exceeded; increases the flexibility with regard to varying customer requirements; simplifiesproduction management to a great extent. Actually, KANBAN doesnt even

need an EDP system. It only requires cards, scheduling boards and discipline.

The KANBAN Method

Owing to its analogue method of operation, KANBAN management is also called the

supermarket principle. Being an anonymous customer, a consumer removes preproduced

goods from the shelf. The operator of the supermarket refills the quantities removed. This

means for produc-tion: planning intervention is necessary only with regard to the quantity to

be kept and the time of ordering. This reduces scheduling and management activities in daily

work to a minimum. Processes are interrelated through a buffer inventory containing

produced parts that are provided by the supplier and removed by the customer.


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KANBAN replaces the conventional order management with consumption management by

forming an interconnected self-managing control loop from two series processes. The control

loop comprises a parts consuming process, that is the customer, and an upstream parts

producing process, that is the supplier. The KANBAN card is the ordering document.

Once the customer process receives the order for producing a product, it removes the

appropriate part from the buffer inventory. The resulting gap must be closed by the supplier

process. The production order is indicated on KANBAN cards attached to the parts or part

containers. When a part is removed from the buffer inventory, the pertinent card is delivered

to the supplier. The cards circulate in a control loop. This process is called card KANBAN.


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Global manufacturing enterprises continually strive to improve their respective

manufacturing operations to regain a competitive advantage particularly in the automotive

and computer industries. These industries are responding to the challenge of e-commerce and

customer ordering via the Internet by shifting to re-configurable manufacturing equipment

and a make-to-order environment. Traditional mass production manufacturing is not

particularly responsive to changing customer demands, for it relies on forecasting future

demand and scheduling the release of work into the system to meet expected demand. Mass

production systems often have excess inventory, higher WIP levels, and longer quoted lead-

times from order to delivery. In contrast, just-in-time production relies on actual demand

triggering the release of work into the system, and pulling work through the system to fill

the demand order. Just-in-time production is better able to respond to changing customer

demands, for as a production philosophy, it advocates producing the right products at the

right times and in the right amounts. Reconfigurable systems allow rapid and low-cost

changeovers to allocate production capacity as needed to the products that are desired.

Manufacturers are also moving toward modular subassemblies built off-line and delivered by

suppliers as needed. Thus, a fundamental understanding of pull manufacturing and assembly

systems is required to implement the make-to-order paradigm.

Industrial engineering undergraduate curriculums generally include a course on production

and operations analysis, in which just-in-time and lean manufacturing principles are

conceptually presented. Many students also take a course on simulation that covers a

simulation language, random number generation, input modeling, verification and validation

strategies, and output analysis techniques. However, there is little or no textbook material

available discussing modeling, control, and analysis of pull systems using simulation. This

paper attempts to address this deficiency, and can serve as a supplement for simulation and

production operations courses.

Simulation models are used in this paper to illustrate the mechanics of pulling within

systems, and give the reader a hands-on approach toward studying Kanban and CONWIP

pull systems. Spearman and Zazanis (1992) provide a more advanced discussion of push,

pull, and CONWIP production systems and present theoretical motivations for the improved

performance of pull systems over traditional push systems. They contribute analytical results

for the types of pull systems considered in this paper, and offer several conjectures that the

reader is encouraged to consider while studying the pull simulation models presented herein.


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(1) There is less congestion in pull systems.

(2) Pull systems are inherently easier to control than push systems but can be conceptually

more difficult to model.

(3) The benefits of a pull environment owe more to the fact that WIP is bounded than to the

practice of pulling everywhere.

PULL SYSTEMS: KANBAN AND CONWIP

Kanban, meaning card or marker in Japanese, is the more widely known and recognized

type of pull system. A Kanban pull system is sometimes referred to as the Toyota Production

System (just-in-time manufacturing using a Kanban pull system) (Monden 1981a). A Kanban

pull system uses card sets to tightly control work-in progress (WIP) between each pair of

workstations. Total system WIP is limited to the summation of the number of cards in each

card set. Production occurs at a workstation only if raw material is available and the material

has a card authorizing production. Material is pulled through the system only when it receives

card authorization to move. Figure 1 illustrates a serial Kanban system. Each Kanban card set

between workstations authorizes material to be pulled into the upstream workstation for

processing and delivery to the downstream workstation. For example, card set 2 (between

Workstations 1 and 2) authorizes an order in the paperwork queue (before Workstation 1) and

raw material to be released for processing at Workstation 1, and delivery to Workstation 2.


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In contrast, a CONWIP pull system uses a single global set of cards to control total WIP

anywhere in the system. Material enters a CONWIP system only when demand occurs, and

the raw material receives a card authorizing entrance; the same card authorizes the material to

move through the system and complete production. When the final product leaves the system,

the card is released, allowing new material to enter the system as new demand occurs. Notice

that WIP is not controlled at the individual workstation level in the CONWIP system. Total

WIP in the system is a constant (thus the name CONWIP), for the cards limit the total amount

of work that can be anywhere in the system. The Kanban system in Figure 1 pulls work

everywhere (between every pair of workstations), while the CONWIP system in Figure 2 only

pulls work at the beginning of the line. Notice that in both diagrams orders are kept in a

paperwork queue prior to Workstation 1 until the order and raw material receive a production

and material movement authorization card.

Once raw material is authorized to enter the CONWIP


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blackbox, the material flows freely as if it were in apush system. Inside the black box,

WIP naturally accumulates in front of the bottleneck station. CONWIP systems handle a mix

of parts having different bottlenecks with more ease than Kanban systems. If the bottleneck

shifts as the mix of parts changes, there may be an opportunity to reduce WIP by reducing the

total number of cards allocated for product flow. Conversely, cards may need to be added to

increase WIP and ensure a desired throughput. CONWIP systems are easy to manage, for

there is only one set of global cards that requires review and adjustment. Kanban systems are

more difficult to manage but more tightly control WIP, for card control of WIP is

implemented at the workstation level. If a product mix change shifts the bottleneck in a

Kanban system, the number of cards allocated to each card set may require adjustment to

ensure a desired throughput. In the simple four workstation example illustrated in Figure 1, if

the bottleneck shifts, three different sets of Kanban cards (controlling WIP before

Workstations 2, 3, and 4) must be inspected.

WHY CONTROL WIP?

Manufacturers have found several advantages in controlling WIP. A finite WIP capacity

limits the amount of material released into the system, allowing orders to stay on paperinstead of as physical material on the production floor. Production systems have a degree of

flexibility that is lost when large volumes of WIP are in the physical system. Keeping orders

on paper until actual production occurs facilitates execution of scheduling and design

changes. Scrapping product due to a design or engineering change can be costly, especially to

a company with large amounts of WIP in the system. By controlling WIP, the amount of

material that needs to be scrapped or reworked is reduced, and financial losses from sales of a

now inferior product are diminished.

A second advantage of WIP control is a reduction in cycle time variability. Referring to

Littles Law (WIP = Cycle Time * Arrival Rate), if the arrival rate is held constant, as the

level of WIP increases, the cycle time must also increase. Push systems allow the possibility

of large WIP buildups, causing high variability in cycle time plus increased costs in terms of

inventory buildup. Increased variability in cycle time forces companies to quote longer lead-

times in order to achieve the same level of customer service. Limiting WIP reduces the

variability in cycle time while allowing the pull system to still achieve the same throughput


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level with less WIP than a push system. To accurately quote a time from order to delivery in

a pull system, the time should include both the time that the order spends on paper and the

actual time in the physical production system.

SHOULD EVERY MANUFACTURING COMPANY USE PULL

SYSTEMS?

The next question to address is should pull systems be implemented in most manufacturing

facilities. Surprisingly, the answer is NO. The two types of pull systems respond slightly

differently to changes in volume and product mix. The major disadvantage for both types of

pull systems is that they require fairly steady product flow. Kanban is typically restricted to

repetitive manufacturing where material flows at a steady rate in a fixed path. Large

variations in volume or product mix destroy the flow and undermine the systems

performance goals. If there is too much WIP, the goal of minimizing WIP in the system is not

achieved, and financial flexibility in dealing with scheduling and engineering changes is lost.

If there is too little WIP, throughput goals cannot be attained. CONWIP, while still requiring

a relatively steady volume, is a little more resilient in handling changes in product mix. The

difference between their capabilities of handling product mixes has to do with the individual

products having different bottlenecks and how WIP is controlled within the system.Questions to consider when assessing whether a pull system should be adopted include:

How often do design, engineering and schedule changes occur?

What are the economic consequences of maintaining the current system compared to

converting to a pull system?

Can a pull system reduce overall lead-time compared to a push system?

Are suppliers reliable enough to support just-intime delivery of raw materials or

subcomponents?

Is the production system reliable, or does it suffer frequent breakdowns that stop

production?

Are labor and management committed to making the changes needed?

How often and how significantly does the product mix change?

In situations where a pull system is found to be acceptable for a facility, a decision of which

type of pull system to implement must be made. As discussed previously, the choice depends


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on the level of WIP control desired (at the individual workstation level, or a blackbox

system level).

SIMULATION MODELS OF KANBAN AND CONWIP PULL SYSTEMS

Simulation models have been developed in Arena 3.5 and tested in Arena 4.0 for the Kanban

and CONWIP systems in Figures 1 and 2 respectively (Marek, 2000). The reader is assumed

familiar with the basics of simulation programming and analysis. The code for these models

is presented in the following sections for the reader to obtain a hands-on feel for the

different pull mechanics in each system.

The serial manufacturing systems being modeled contain four workstations, and must

produce two types of products. The make-to-order production facility has reconfigurable

manufacturing equipment, allowing rapid and low cost changeovers to switch between

product types. The setup times for changing between product types are considered to be zero

on the assumption that the products are quite similar. This is a realistic assumption, for

production line designers are now examining the value of agile tooling, fixtures, and material

handling, so that any part in a general family may be produced on the line if the designed partfits within the lines production envelope. For this reason, product types are not batch

processed on a forecasted basis, but are processed on a first-come firstserve (FCFS) basis as

orders arrive. Product types are assigned from a discrete probability distribution for each

arriving order with 70% type 1 and 30% type 2. Process times at each workstation may

depend on product type. Machine breakdowns and supply chain failures are currently not

considered.

The variance reduction technique of Common Random Numbers (CRN) (Pegden, et al.,

1995) is employed to synchronize usage of random numbers in the Kanban and CONWIP

systems so that the systems are compared under similar conditions. Each system observes the

same sequence of arrivals of type 1 and type 2 jobs and uses the same processing times for

jobs at each workstation. This approach is often justified for scenario analysis whereby the

analyst seeks to compare two or more alternatives (systems) and control specified parameter


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sequences while permitting other system parameters to vary. By designing the various

simulation runs, the analyst can better distinguish the impact(s) of specific changes in the

scenarios.

Throughout the remainder of this paper, specific ARENA modeling constructs are used to

define the modeling approach. The ARENA SEEDS element controls the six random number

streams used (See Table 1). By using common random numbers, randomness in experimental

conditions is reduced, and any measured differences in the two systems are due to the pull

behavior and card control level used.

Stream Seed Purpose

1 2323 Job Inter-Arrival Times

2 4545 Workstation 1 Processing

Times


Times


Times


Times

6 1974 Job Type

The Arrival Rate and the Shifting Bottleneck

The arrival rate of orders is taken arbitrarily to be 1/54 orders per minute. This arrival rate is

of interest, for the paperwork queue (queue before Workstation 1) explodes if only part type 1

or part type 2 is processed. Considering product mix is important, for by construction, the

bottleneck also shifts if only one type of part is processed. If only part type 1 is processed,

Workstation 3 is the bottleneck; if part type 2 is processed, Workstation 4 is the bottleneck.

For the product mix as stated and orders processed FCFS, the system bottleneck is

Workstation 3, and the paperwork queue is relatively stable (does not explode).


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Bottleneck Determination

Bottleneck determination is straightforward for both types of serial pull systems. Ignoring

machine breakdowns, and assuming no scrap or rework occurs, the bottleneck is the

workstation with the highest utilization. Suppose that 24 cards are allotted for each Kanban

card set. After running the Kanban model for a replication length of 96000 minutes with a

warm-up of 64000 minutes, Workstation 3 can be verified to be the bottleneck, with 99.213%

utilization (compared to utilizations of 38.249%, 57.247%, and 81.421% at Workstations 1,

2, and 4 respectively). Similarly, if a total of 30 cards is allotted for the CONWIP system, and

the CONWIP model is run for a replication length of 96000 minutes with a warm-up of

64000 minutes, Workstation 3 is again the bottleneck with 99.23% utilization (compared toutilizations of 38.16%, 57.28%, and 81.44% at Workstations 1, 2, and 4 respectively).

Measuring Workstation Utilization

In the Kanban model, a card and workstation are seized simultaneously. As soon as

processing completes, the workstation is released. However, the current card is retained, until

the part receives the next card authorizing movement to the next workstation. The ARENASEIZERELEASE sequence allows a more accurate measure of workstation utilization for

Kanban pull systems. Each workstation processes only when authorized to do so, and is busy

only for the process time duration. In the CONWIP model, the workstation is seized when

available and released as soon as the processing time is complete. The SEIZE-RELEASE

pattern in the CONWIP system also yields an accurate measure of workstation utilization for

the CONWIP system.

One Card or Two Cards?

The Kanban pull model demonstrates a 1-card Kanban system with 24 cards assigned to

control WIP before each of Workstations 2, 3, and 4. The CONWIP pull model is also a 1-

card model, with a total of 30 cards allotted to control WIP. 1-card systems are the easiest to

understand and implement, and use the same card to authorize material movement and

production. 2-card systems are similar to 1- card systems, but use 2 different types of cards to


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control production and material movement separately. The codes can be modified

appropriately to implement a 2-card level of control.

Blocking After Service

Card control in a Kanban system can cause a workstation to become idle, even if it has raw

material to process. This idleness is due to blocking after service. The blocked workstation is

forced to stop production because there are no available cards to pull work from the current

workstation. Card control at the individual workstation level introduces an additional level of

dependence between the workstations. The simpler card control structure in CONWIP

systems does not introduce the additional workstation dependency nor cause blocking afterservice. Since a CONWIP system behaves as a push system inside the black box, each

workstation will continue to process work as long as there is work in the queue before it. WIP

will tend to accumulate in front of the bottleneck workstation. However, queue explosion

does not occur as in a push system, since card control limits total WIP.

JUST IN TIME

INTRODUCTION

Why Just-In-Time manufacturing when there are dozens of other manufacturing

philosophies from which a company may choose? Just-InTime (JIT) manufacturing distances

itself from the competition because no large capital outlays are required. Other methods

promote complexity, large overheads, automation, and other "state-of-the-art" technologies,

while JIT advocates simplifying and streamlining the existing manufacturing process.

Since World War II, traditional American companies have developed a way of doing business

that entails top management planning, re-planning, and more planning. Although some

planning is good, it ultimately adds no value to the end product. Customers want quality

products at competitive prices they couldn't care less how much planning was required to get

that product to them. By implementing JIT, much of the planning disappears and a large

portion of the remaining planning is entrusted to the shop floor personnel.


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The purpose of this text is to introduce basic JIT concepts and assure you that JIT can work in

your company. The transition to JIT often is not easy, but it is almost always rewarding. All

employees in the company - from top management to direct labor - must have a clear

understanding of the benefits that JIT offers to them and to their company. JIT is not a cure-

all for every manufacturing problem. But, if implemented properly, JIT is a no-cost or low-

cost method for improving your manufacturing process.

JIT PHILOSOPHY

The basis of Just-In-Time (JIT) is the concept of ideal production. It centers on the

elimination of waste in the whole manufacturing environment, from raw materials through

shipping. Just-In-Time is defined as "the production of the minimum number of different

units, in the smallest possible quantities, at the latest possible time, thereby eliminating the

need for inventory. Remember, JIT does not mean to produce on time, but to produce just in

time.

History of Just-In-Time

JIT is sometimes said to have been invented by Henry Ford because of his one-at-a-time

assembly line, circa 1913. This is an incorrect conclusion since Ford's system could handle

no variety and was designed for large volumes and large batch sizes of the same parts.

JIT was invented by Taiichi Ohno of Toyota shortly after World War II. Ohno's system was

designed to handle large or small volumes of a variety of parts. Many people are intimidated

by JIT because of its association with Japan. If these people take a broader look at JIT, they

will see that it is nothing more than good, common sense manufacturing.

Ohno and his associates came to America to study our manufacturing processes. They

determined that our system was much like the system that Japanese companies were using,

but Japanese companies could not afford waste in their systems due to the devastation to their

economy caused by World War II. While in America, Ohno learned much about America's

culture. One of his discoveries has transformed the world's perspective on manufacturing.


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From Supermarket To Shop Floor

Legend has it that Ohno got the idea for his manufacturing system from America's

supermarket system. Ohno learned the kanban (pull) system from our supermarket system in

which customers pulled items from the shelves to fill their shopping carts, thereby creating an

empty space on the shelf. The empty space is a signal for the stocker to replace that item. If

an item was not bought that day, there was no need to replace it. When item quantities

become low, that is the signal for the stockers to order more goods from their suppliers.

Customers are content to take just what they need, because they know that the goods will be

there the next time they need them.

To apply this concept to manufacturing, Ohno devised a system whereby the usage of parts is

determined by production rates Materials are pulled through the plant by usage or

consumption of the parts in final assembly. To obtain maximum results, Ohno decided to

move the machines closer together and form manufacturing cells.

The JIT system continued to evolve, with the central thrust being the elimination of waste.

Ohno's system has become a totally flexible system in which production rates are determined

by the end user rather than the producer.

What To Expect

While the prevailing view of JIT is that of an inventory control system, it is much more. JIT

is an operational philosophy which incorporates an improved inventory control system in

conjunction with other systems, such as:

A set-up time improvement system.

A maintenance improvement system.

A quality improvement system.

A productivity improvement system.


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A properly implemented JIT system should:

Produce products customers want.

Produce products only at the rate that customers want them.

Produce with perfect quality.

Produce instantly with zero unnecessary lead time.

Produce with no waste of labor, material, or equipment. Every move has a purpose and

there is no idle inventory.

An overview of JIT literature suggests that the steps or elements of the implementation

process generally (though not always) include the following:

Reductions in set-up time.

Utilization of a formal preventive maintenance program.

Utilization of quality circles.

Utilization of cellular manufacturing techniques.

Cross-training of employees.

Quality certification of suppliers.

Reductions in vendor lead time.

Reductions in lot sizes.

Sole sourcing.

Presence of one who "championed the cause of JIT within the firm.

Benefits touted as results of JIT implementation include:

Reductions in down time.

Reductions in inventory.

Reductions in scrap and re-work.

Reductions in workspace.

Increased inventory turns.

Increased labor utilization.

Increased equipment utilization.

Improved service to customers.


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VALUE-ADDED ANAlYSIS

Maybe you believe that your company is efficient enough and that the benefits of JIT are not

worth the frustration and stress associated with change. At this point you have a decision to

makeyou can adopt a new company motto such as Were no worse than anybody else, or

you can take positive steps toward improving the process. To strengthen the incentive for

change, companies should identify the inefficiencies (wastes) in their present manufacturing

processes.

To identify waste in your company, a value-added analysis should be performed. We must

always be aware that any activity that does not add value to a product is waste. There are

specific methods for performing a value-added analysis but we will use a simplified approach

for our purposes. Take a pad and pencil and go out on the shop floor. Pick a product and

follow it through the entire manufacturing process from raw materials to shipping. Note every

activity performed on the product. Do not get a routing slip to see how the process is

supposed to go, but accurately record the process including delays, transportation, inspection,

storage, etc. Figure 1-1 on the following page is a value-added analysis for a machined part.

UNDERSTANDING WASTE

Ask almost any shop floor employee the definition of inventory and the likely answer will be

you know all this stuff stacked up around here and all that stuff in the warehouse. Many

employees (and some supervisors and managers) do not understand that Work-In-Process

(WIP) is also inventory. Pure and simple inventory is waste. Another way to describe

inventory is money loaned out of a companys pocket that has yet to be repaid.

JIT is much more than a plan for decreasing inventory, it is a manufacturing philosophy for

eliminating waste. For our purposes, waste can be defined as something other than the

essential resources of people, machines, and material needed to add value to the product.

Anything else, such as inventory, scheduling, meetings, warehousing goods, management,

and moving stock can be considered wasteful because these actions do not directly add value

to the product. All waste cannot be purged from the system, however, we must strive toward


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that ideal goal. Above all it must be ever present in the attitudes of our manufacturing system

that cost without value is waste.

A typical company produces excess inventory with the idea that we can use this stuff when

the next order comes in." Routinely these parts are forgotten when the next order is placed.

Other than initial costs of the products, they are also paying for moving the product,

warehouse space, fork trucks, warehouse personnel, tracking the products, and moving the

products again, etc. One company that we visited was constantly plagued with the problem of

misplaced inventory. They had numerous storage bins, plus inventory was sometimes

temporarily placed on the shop floor in different places. More often than not, new parts

would be made when the internal customer needed the parts, because nobody knew the parts

already existed. Another company we visited wastes money on rust preventatives and the

time-consuming task of removing rust from parts in storage solely for the benefit of excess

inventory.

JIT AND QUALITY

The single most substantial ingredient of JIT is quality. It is impossible for JIT to be

successful until the company has drastically improved its attitude toward quality. In the

language of the Malcolm Baldrige National Quality Award, quality is a race with no finish

line." The ultimate aspiration is to satisfy all customers (internal and external) all the time.

The Wallace Company, a past winner of the Baldrige Award, installed a buzzer on the shop

floor that sounded anytime a customer called their customer service hot line. Instantly all

workers knew they had a dissatisfied customer. Can you imagine installing such a device in a

traditional manufacturing company?

What is Quality?

One of the great gurus of quality, Phil Crosby, says that companies often have a

misconception of quality. He says that the true definition of quality is meeting

requirementsnot an intuition for aesthetics, roundness, or perfectionbut something that

can be truly measured. If a Yugo (economy car of the the early 1970s) meets its customer's


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requirements as well as a Rolls Royce meets its customer's requirements, then it can be

argued that the Yugo is as much a quality car as a Rolls Royce.

Now that we understand what quality is and what it can do for us, how do we get quality?

The key is to obtain quality at the source. The sources for quality are the manufacturers and

vendors processes, machines, and operators. Contrary to traditional beliefs, the source of

quality is not the inspection bench.

Preventing Quality Problems

To dismantle the inspection bench mentality, we must take positive steps in prevention ofquality problems. Specific guidelines and rigorous procedures must be established. The steps

toward attaining a quality product are to first define the requirements, get the process under

control, and then keep the process under control.

Defining the Requirements

Many manufacturing companies do an inadequate job of defining quality requirements. If you

are looking at a part or a process, and say thats good enough then you have not sufficiently

defined your requirements. The real definition of quality is meeting both internal and external

customer requirements. Employees and vendors should have strict guidelines that distinguish

good parts (quality) from rework or rejected parts so 100 percent customer satisfaction can be

reached.

Let us look back at our ACME manufacturing example. The assembler had no specificrequirements for pressing the bearings into the wheel. He was told that the wheel must run

true. What is true? How much leeway does he have? Can the bearings be somewhat angled or

must they be exactly straight? The assembler should be supplied with strict criteria for quality

such as each bearing should be pressed into the wheel at a perpendicular angle plus or minus

one degree. He now knows what is expected and what is considered good enough.


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The Root Cause of the Problem

To get the process under control, you must first find the root cause of the problem. This can

be accomplished by running the gamut from simple methods such as pareto and matrix

analysis to complicated design experiments. A common problem is to attack the symptom

and not the problem. For example, if a breaker tripped at your house, you could reset the

breaker and hope for the best, replace the breaker box, or you could check for an overloaded

plug (too many appliances plugged into one outlet). In your manufacturing process, dont

make the mistake of rewiring the whole house before the actual problem is diagnosed.

Everyone has worked on a problem that magically went away, although you were not exactlysure why. It could be any one of the solutions you tried or a combination of any two. In this

case, you do not know if you have gotten to the root cause or not. You must be able to turn

the problem on and off to ultimately conclude that the problem has been solved. If you can

not turn the problem on and off it is likely that you have solved a symptom rather than a

problem. At this point you should ask why and continue to ask why until you find the

root cause.

Keeping Control of the Process

Once you have found the solution, keeping the process under control is an easier task.

Statistical Process Control (SPC) is a method of managing a process by gathering information

about it and using that information to adjust the process to prevent problems from occurring.

Using SPC is one way to keep your process under control. Poka-yoke, a Japanese word for

fail-safing, should also be applied. In the Pokayoke theory, parts andprocesses are designedso that doing the job right is easier than doing it wrong. An example of this is to design a part

that is asymmetrical so that it fits only one way, thus eliminating misinstallation. Machines

can be fitted with limit switches that will not allow it to cycle if all processes are not

completed in the correct order. These methods should not only be used by your company but

by your vendors as well.


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UNIFORM PlANT LOAD

The diversion between traditional manufacturing philosophy and JIT becomes apparent when

discussing the concept of Uniform Plant Load. Everyone will agree that we need to eliminate

waste and strive for quality to receive the most benefit from our manufacturing systems, but

there are two views on how to go about this. The traditional system calls for production at the

machine rate while JIT advocates production at the customer requirement rate. The JIT

concept of Uniform Plant Load states that balance between operations is more important than

speed, and ideally we should never produce faster than the customer requirement rate.

The concept of Uniform Plant Load incorporates two radically different facets of production.They are rate of production (cycle time) and frequency of production (level loading). It must

be remembered that neither of these concepts will achieve maximum results until the process

is under control and quality has been improved to world-class or near world-class standards.

Cycle Time

Traditional definitions of cycle time include the time it takes a machine to cycle through its

process or the time from start to completion of a product (throughput time). Under JIT, cycle

time is the total time required for a worker to complete one cycle of operations, including

walking, load/unload, inspect, etc. Cycle time should equal the customer requirement rate, or

better stated the sales rate. We should view the last step in the manufacturing process as when

the product gets sold, not when the product is completed. This rate is also expressed in terms

of takt time. Takt time is the total daily operating time divided by the total daily requirement.

Takt time tells you how many hours, minutes, or seconds are required for each part.

Takt is a German word for baton. In comparing a manufacturing process to an orchestra, the

rate at which the orchestra leader moves the baton is the rate at which the orchestra plays, just

as the rate of customer requirement is the rate of company production.

Companies that have produced as fast as possible (machine rate) for many years often

struggle with the concept of slowing down individual machines so as to achieve perfect

balance between operations. If your customer requirement rate is 20 parts per month, then


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why would you want to produce 30 parts per month? This would lead to the evils of

inventorythe consumption of space, waste in motion, and materials that hide problems.

Conceptually, each machine should run as if a rheostat were attached. The rheostat could be

dialed up or down as needed to produce at the exact rate required. If the requirement rate

changed from month to month then the production rate could be altered to meet these

requirements. If you set the last operation to the sales rate then each preceding operation

should feed the last operation at that rate. This system can then be exploded backwards

throughout the plant until the first operation (usually raw materials) is reached.

Workforce

If ten people are producing 20 parts per month in August, but only ten parts are needed in

September, five people should then be capable of producing the needed ten parts so that labor

costs remain constant. This reduction can only be accomplished with a good physical plant

layout (to be discussed later) and a well-trained, flexible workforce. The logical questions at

this point are: Where do the five people go?, and Where do they come from when

production goes back to 20? It must be made abundantly clear that the purpose of

implementing JIT is not to reduce the workforce. You can now use this idle time to cross-

train employees for even more flexibility. When not on the production line employees can

perform other tasks, attend team meetings, do preventative maintenance, make plans to

further improve the process and so forth. Rather than producing extra parts and dealing with

inventory, you are now optimizing employee time. That leads us to the golden rule of JIT:

Machines can be idle but people cannot.

We should not make the mistake of trying to find the perfect balance between parts produced

and manpower required. There is no perfect balance. We must decide how many parts the

line should produce that month, week, or day and balance to that number. Remember, the

answer is not to run the line as fast as possible, but to produce to the customer requirement

rate by deciding how fast the line must run to meet the particular deadline and how many

people are needed for this rate.


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SETUP TIME REDUCTION

Setup time is the interval between the production of one good part and the production of

another good but dissimilar part. Setup reduction is a prerequisite to implementing many

aspects of JIT by directly or indirectly influencing cycle time, level loading, work cells, pull

systems, cost, WIP, purchasing, floor space, quality, operator numbers, and batch sizes.

Everyone will agree that a two-hour setup reduced to two minutes is a great productivity

improvement, but this saved time should not be applied to longer production runs that

increase batch sizes. An hour saved that is transferred to the production of parts simply puts

those parts in inventory, which is the exact opposite of what we are striving for. Our

objective

Documents

Production Management Report