Manufacturing, Service Operations and Logistics from Prof. Goldsman’s lecture notes

Outline Manufacturing and Service Terminologies Product/Process Matrix

Vocabulary List ManufacturingService Setup, setup cost Lot or batch size Product mix Capacity Custom process/project Jobshop Batch flow/batch process Line flow/flowshop/flowline/mass production Continuous flow Product/process matrix Capital intensive, labor intensive

Manufacturing versus Service Manufacturing: makes things Physical goods: books, cellphones, pipes, bricks, cars, … Service: makes intangible items Education, lawyers and other professionals, repairs, hotels, entertainment, … Created, delivered, and consumed at once << capital investments compared to manufacturing

Why Service Matters? Growing sector Newer, hence more opportunities for IEs Environmental concerns turning manufacturing into service Buy transportation, not a car!

Product/Process Matrix PRODUCT MIX PROCESS PATTERN One of a kind or few Low Vol. many products Higher Vol. several major products Very high Vol. Std product (commodity) Challenges for management Very jumbled flow; process segments loosely linked PROJECT JOBSHOP Scheduling; materials handling; shifting bottlenecks Jumbled flow; but a dominant flow exists BATCH FLOW Worker motivation; balance; maintaining enough flexibility Line flowLINE FLOW Cont, automated, rigid flow; process segments tightly linked CONTINUOUS FLOW Capital expenses for big chunk capacity; technological changes; material mgt; vertical integration Challenges for Mangement Bidding; delivery; product design, flexibility Quality (product diff ’ n); flex in output vol. Price Stay on the diagonal!

Note That … During the lifecycle of a product (Product Life Cycle), the process strategy may change Computers? Many real process don ’ t fit so neatly into these categories It ’ s just a guidelines!

Supply Chain Management “Consist of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers and customer themselves” – Chopra and Meindl Assembler Distributors Suppliers Logistics Providers Suppliers’ Suppliers Customer

Supply Chain Management PhysicalProduct SCM Money Information

ManufacturersWholesale Distributors Suppliers Customers Information Flows Goods Flow Retailers The Traditional Supply Chain

Customers Today’s Supply Chain Supplier Exchanges Customer Exchanges Logistics Exchanges Contract Manufacturers Logistics Providers Virtual Manufacturers Manufacturers Wholesale Distributors Information Flows Goods Flow Retailers

Four Categories of SCM*) *) Michael Hugo PLAN SOURCE MAKE DELIVER

Plan-Source-Make-Deliver Procurement Credit and Collections Product Design Productions Scheduling Facility Management Order Management Delivery Scheduling Make Deliver Demand Forecasting Product Pricing Inventory Management Plan Source

Benefit of SCM Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization Increase Competitiveness

Customer Results: Increased ROI wPlanning Cycle Time wOperating Expenses (Overtime) expenses wCustomer Service wThroughput revenues wInventory wOrder LT wProduction LT assets ROI

Key Drivers Key drivers to the SCM process are: –Shorter life cycles –Reduced costs –Improved customer service

Program Binusian hours days weeks months year + buy make move sell store operational tacticalstrategic scheduling strategicbusinessplanningstrategicbusinessplanning master planning demand fulfillment manufacturing planning scheduling distribution planning transportation planning demand management demand management Supply Chain Solutions Covers ROI impact

SCM: Manufacturing Perspective Production by lots Make-to-order production Special machine building P R O D U C T C O M P L E X I T Y P R O D U C T S T A B I L I T Y Assembly production/ Assemble-to-order Period-based production/takted flow production Mass production Process manufacturing