Why Manufacturing Matters (in Thailand) 1

How to improve the productivity ( ผลิตภาพ ) of an Organization Organization Finance Operations Marketing 2 Management system

Operations Management (supplement topic) APICS defines operations management as "the field of study that focuses on the effective planning, scheduling, use and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the organization" (APICS Dictionary, 11th edition) APICS was founded in 1957 as the American Production and Inventory Control Society Currently, APICS becomes The Association for operations management, a not-for-profit international education organization, offering certification programs, training tools and networking opportunities to increase workplace performance. 3

Operations Management includes: –Forecasting –Capacity planning ( การวางแผนกำลังการผลิต ) –Scheduling ( การทำตารางการผลิต ) –Managing inventories –Assuring quality –Motivating employees –Deciding where to locate facilities –Supply chain management –And more... Scope of Operations Management Production planning and control (current topic) 4

5 Supply Chain Management Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer (Supply Chain Council) การบริหารอุปทานและอุปสงค์ นับตั้งแต่แหล่งวัตถุดิบ และชิ้นส่วน การผลิตและการประกอบคลังสินค้าและ ติดตามสินค้าคงคลัง การป้อนใบสั่ง การกระจาย สินค้าตลอดทุกๆช่องทางและการส่งมอบให้กับลูกค้า SCM มีจุดมุ่งหมายพื้นฐานเพื่อควบคุมวัสดุคงคลัง โดยการจัดการการไหลของวัสดุระหว่างผู้ส่งมอบและ บริษัท ภานในบริษัท และระหว่างบริษัท จนถึงลูกค้า ให้ไหลรื่นด้วยจังหวะความเร็วที่สมดุลและยืดหยุ่นใน การตอบสนองความต้องการของลูกค้าอย่างรวดเร็ว และด้วยต้นทุนต่ำที่สุด ( พิภพ ลลิตาภรม 2549)

Production Planning and Control Production control is: “the task of predicting, planning and scheduling work, taking into account manpower, materials availability and other capacity restrictions, and cost so as to achieve proper quality and quantity at the time it is needed and then following up the schedule to see that the plan is carried out, using whatever systems have proven satisfactory for the purpose.” 1 1 Reinfeld, N.V., Production Control., Prentice-Hall, Englewood Cliffs, NJ. Production planning and control systems Man Machine Materials Capital Information Quality Quantity Delivery time Inventory management MRP, ERP, JIT 6

Scope of production control and the flow of information 7

Scope of production control and the flow of information (extended version) Forecasting Aggregation planning (long-rang planning) Master production schedule (short-rang planning) Inventory control Shop scheduling Monitoring Control Marketing and sales Production engineering Production engineering Human resource (work force) Testing and inspecting purchasing Raw materials Inventory Shipping finished goods assemblingmachining

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Production planning and control Pond draining/re-order point system Push System/ Material Requirement Planning System (MRP) Pull System/ Just In Time (JIT) 16

Pond draining/re-order point system 17

Push System/ Material Requirement Planning System (MRP) 18

Pull System/ Just In Time (JIT) 19

Productivity Partial measures – output/(single input) Multi-factor measures – output/(multiple inputs) Total measure – output/(total inputs) Productivity= Outputs Inputs 20

Productivity Growth Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth = 21

Measures of Productivity Partial Output Output Output Output measures Labor Machine Capital Energy Multifactor Output Output measures Labor + Machine Labor + Capital + Energy Total Goods or Services Produced measure All inputs used to produce them 22

Units of output per kilowatt-hour Dollar value of output per kilowatt-hour Energy Productivity Units of output per dollar input Dollar value of output per dollar input Capital Productivity Units of output per machine hour machine hour Machine Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Labor Productivity Examples of Partial Productivity Measures 23

Example Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000 What is the multifactor productivity? Ans. 2.0 units per dollar of input 24

Example 3 Solution MFP =Output Labor + Materials + Overhead MFP =(7040 units) $ $520 + $2000 MFP =2.0 units per dollar of input 25

Productivity Productivity = Output Input 26

Productivity Labor productivity = Policies processed Employee hours Example 1.1a 27

Productivity Labor productivity = 600 policies (3 employees)(40 hours/employee) Example 1.1a 28

Productivity Labor productivity = 5 policies/hour Example 1.1a 29

Productivity Labor productivity = 5 policies/hour Multifactor productivity = Quantity at standard cost Labor cost + Materials cost + Overhead cost Example 1.1b 30

Productivity Labor productivity = 5 policies/hour Multifactor productivity = (400 units)($10/unit)$4000 $400 + $ $300$1700 = = 2.35 Example 1.1b 31

Productivity Measures 32

Productivity Measures Figure 1.5a OM Explorer Tutor 1.1—Productivity Measures The state ferry service charges $18 per ticket plus a $3 surcharge to fund planned equipment upgrades. It expects to sell 4,700 tickets during the eight-week summer season. During that period, the ferry service will experience $110,000 in labor costs. Materials required for each passage sold (tickets, a tourist-information sheet, and the like) cost $1.30. Overhead during the period comes to $79,000. a.What is the multifactor productivity ratio? b.If ferry-support staff work an average of 310 person-hours per week for the 8 weeks of the summer season, what is the labor productivity ratio? Calculate labor productivity on an hourly basis. Click here to continue. 33

Productivity Measures Tutor 1.1—Productivity Measures Enter data in yellow areas. Use Tab to advance from one input cell to the next. a. Multifactor productivity is the ratio of the value of output to the value of input. Step 1. Enter the number of tickets sold during a season, the price per ticket, and the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge. Tickets sold:4,700Value of output: Price:$18 Surcharge:$3 Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs. Labor costs:$110,000Materials costs:$1.30Overhead:$79,000 Value of input: Step 3. To calculate multifactor productivity, divide value of output by value of input. Multifactor productivity: Figure 1.5b 34

Tutor 1.1—Productivity Measures Enter data in yellow areas. Use Tab to advance from one input cell to the next. b. Labor productivity is the ratio of the value of output to labor hours The value of output is computed in part a, step 1. Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together to calculate labor hours of input. Hours per week:310Weeks:8 Labor hours of input: Step 2. To calculate labor productivity, divide value of output by labor hours of input. Labor productivity: Click here to view the Results sheet. Productivity Measures Figure 1.5b 35

Productivity Measures Tutor 1.1—Productivity Measures Place cell pointer on green shaded areas to examine formulas. a. Multifactor productivity is the ratio of the value of output to the value of input. Step 1. Enter the number of tickets sold during a season, the price per ticket, and the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge. Tickets sold:4,700Value of output:$98,700 Price:$18 Surcharge:$3 Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs. Labor costs:$110,000Materials costs:$1.30Overhead:$79,000 Value of input:$195,110 Step 3. To calculate multifactor productivity, divide value of output by value of input. Multifactor productivity:0.51 Figure 1.5c 36

Tutor 1.1—Productivity Measures Place cell pointer on green shaded areas to examine formulas. b. Labor productivity is the ratio of the value of output to labor hours The value of output is computed in part a, step 1. Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together to calculate labor hours of input. Hours per week:310Weeks:8 Labor hours of input:2,480 Step 2. To calculate labor productivity, divide value of output by labor hours of input. Labor productivity:$39.80 Productivity Measures Figure 1.5c 37