Context of Manufacturing Manufacturing Systems Context of Manufacturing

Manufacturing Systems The Context of Manufacturing Quality Management Project Management Concurrent Engineering Manufacturing System Design and Control

The Context of Manufacturing Manufacturing is part of a bigger scheme known as operations. Operations takes in all systems that involve getting work done. services manufacture The same principles apply to both.

The Context of Manufacturing Operations is a transformation process. Inputs are transformed into outputs. Goal is to create and add value to the inputs during the transformation. Inputs Materials Labour Equipment Capital Outputs Goods Services Transformation process Manufacture: adding value to a raw material by changing its shape or properties.

Manufacturing process Technical terms: manufacturing process is used to turn raw material into finished items. Scrap and waste Starting material Processed Part Machinery Tooling Power Labour Manufacturing process

Manufacturing Process Economics terms: the value added to the inputs is important. Starting material Processed Part Material in process Manufacturing Process € €€ €€€ Added Value

Manufacturing Industries can be grouped into: Primary – exploit natural resources Secondary – converts primary outputs into consumer goods - manufacturing Tertiary – contributes to the service sector

Business Strategies Companies exist to make a profit Products offered by more than one company Companies compete for market share Company needs a strategy Direction Focus

Business Strategies A strategy consists of four steps: Define a primary task Assess core competencies Determine order qualifiers and order winners Position the firm

Business Strategies 1. Define a primary task Represents the purpose of the firm - what is its business Identifies the area in which it will be competing - stated in broad terms. e.g. Iarnrod Eireann is in the business of Transportation, not Railways Often expressed as a mission statement. Amazon.com - ‘To provide the fastest, easiest, most enjoyable shopping experience’

Business Strategies 2. Assess core competencies Identify what the company does best Usually based on knowledge or processes Rarely single product or technology – easily copied Dell Computer: is the ability to quickly assemble computers to order and to deliver them to customers without delay.

Business Strategies 3. Determine order qualifiers and order winners An order qualifier is a characteristic of a product that will make a consumer consider buying it. An order winner is the characteristic of a product that will make the consumer purchase it. Buying a car: Order qualifier - price Order winner - model with the most features

Business Strategies 4. Position the firm Choose one or two important things to concentrate on and do extremely well. Defines: how well the firm competes in the marketplace what unique value it will deliver to the consumer Relative strengths of competitors must be taken into account Apple computers do not compete with companies such as Dell for its market – they concentrate on a niche market for innovative products such as the iPhone, IPod where they are often first to the market.

Manufacturing Strategies Different ways of offering a product: Make to stock Products are designed, produced and delivered to customer specifications in response to an order Make to order Products are designed and produced for a ‘standard’ customer in anticipation of demand. Assemble to order Base unit or module is produced onto which options can be added according the specification of the customer.

Manufacturing Strategies Types of Production Processes: Project Long time to complete Large investment in resources One item to customer order Batch production Product produced in batches Volume relatively low Demand for item can fluctuate

Manufacturing Strategies Types of Production Processes: Mass Production Large volume of standard product Demand is stable Demand is high Continuous Production Very high volume products Highly standardised Highly automated systems

Product Process Matrix Relationship between volume levels and standardisation of a product and its manufacturing process Continuous Production High Mass Production Volume of products Batch Production Projects Low Low High Standardisation

Functional Organisation of a Manufacturing Enterprise Finance / Accounting Budgets Stockholder requirements Cost Analysis Production and Inventory data Orders Quality requirements Design Specs Material availability Quality data etc. Suppliers Sales Forecasts Customer orders Customer feedback Promotions Status of order Marketing Manufacturing Hiring/Firing Training Legal requirements Job design Union negotiations etc. Human Resources

Key Success Factors in Manufacturing Competitiveness Global market means more customers but also more competition Companies will usually compete on: Cost - Ryanair, Penneys Quality - Toyota, Mercedes Flexibility - Dell Speed - Dell, McDonalds

Simple System for Costing Often a choice is available: Make the product individually Costs more No setup cost Set up tooling and mass produce Setup cost Cost less to make once set up

Simple System for Costing Break even Analysis Used to choose the most economical method for making a given number of parts. or Finding the least number of parts to justify setting up a mass production system

Simple System for Costing Break even Analysis Cost Number of units made Total Cost of process A Total Cost of process B Choose Process A Choose Process B Break Even Quantity

Simple System for Costing Example: Qty: 500 required Skilled labour costs €2.50 per item to manufacture using the lathe. Unskilled labour costs €0.50 to manufacture using the automated press. The setup cost of the press tool is €500

Simple Systems for Costing

Simple Systems for Costing Calculating BEQ numerically BEQ = 500/(2.50 – 0.5) = 500/2 = 250 Items