1. Manufacturing Systems Basics
What is manufacturing?
Manufacturing Strategy
Mfg Systems Characteristics
Manufacturing Outsourcing
Compiled by:
Alex J. Ruiz-Torres, Ph.D.
From information developed by many.

2. What is Manufacturing?
Manufacturing is the physical transformation of a set of inputs into a product (the output).
Assembly (case + board + …  phone)
Molding (rubber  eraser)
Mixing (yeast + water + …  beer)
many more…

3. What is Manufacturing?
Most operations management theories and models originated in manufacturing.
Manufacturing is associated with physical transformations, but manufacturing organizations are full of service type processes
Internal: HR, accounting, procurement, ….
External: order processing, repairs, customer service.

4. Manufacturing Strategy
Action plans related to the firm’s manufacturing capabilities/ approaches/ technologies as to achieve its goals.
Manufacturing processes and technologies dictate cost, quality, speed, innovation, and variety, of its products.
For example
Cost strategy: high volumes, standard products, simple technology and equipment
Innovation strategy: invest in innovation to develop new processes and technology

5. Manufacturing Strategy
Products and Manufacturing
How products are designed is critically important to manufacturing.
Poor designs leads to problems in manufacturing, …leads to problems with the customers.
Problem: manufacturing and product design occurs in different locations, often different organizations, countries…

6. Manufacturing Strategy
Past approach: We design it, you build it or Over the wall.
Design group will come up with a design and then send to production.
Production realized the design was not possible due to current equipment limitations. So they send it back to the design group.
The design group made changes and sends it to the quality department. They found problems and sends back to the design department.
This keeps going, with the design flowing back and forth between departments.

7. Manufacturing Strategy
Products and Manufacturing
A main problem is the lack of knowledge and concern with production environment and requirements from other functions.
Design group has limited or no manufacturing knowledge.
Another problem is that designers may not emphasize the use existing components and equipment.
For example a new mobile phone design uses a new battery, when a 99% similar battery is already used on existing phones.
Better to use existing proven battery than create a new component.

8. Manufacturing Strategy
Better approaches
Concurrent Engineering > Design work occurs in parallel across multiple departments.
Product design, Marketing, Engineering, Production, and Quality department s all working together simultaneously to design the product.
From the start the design team includes manufacturing, and quality functions into the process.
Design for Manufacturing and Assembly (DFMA)
Design the product so it fits existing capabilities/ equipment.

9. Mfg Systems Characteristics
Manufacturing systems can be very different.
Depends on what is being manufactured – depends on the customer’s needs.
Image Sources: Wikimedia Commons

10. Mfg Systems Characteristics
Standard Products: the manufacturing system makes products that have fixed specifications (technical, packaging,…).
Example: a basic mobile phone manufacturing line; Medalla bottles.
Image Sources:

11. Mfg Systems Characteristics
Customized Products: The specifications are determined by the customer. Customer has a set of options or the product is designed with the customer before going over to production.
Examples: make to order gaming computer; Dell computers.
Image Sources:

12. Mfg Systems Characteristics
Manufacturing Systems are therefore divided into two categories:
Make to Stock (MTS): The product planning typically responds to demand related to inventory replenishment.
Standard Products
Make to Order (MTO): The product planning and release depends on a customer request.
Customized Products
Standard Products (if demand is sporadic and/or to minimize inventories)

13. Manufacturing Systems
In general terms MTS systems are more efficient and less difficult to manage than MTO systems.
Easier to plan for a known product than a product with different characteristics.
Less inventory of raw material items.
Less time to complete the cycle as there is no need to wait for customer inputs.
Can stock finished goods to handle increases in demand.

14. Mfg Systems Characteristics
Mass Customization and Postponement
Concept of partially transforming an MTO system (with associated high costs and long lead time) to a MTS system with lower costs and faster response time
inv
Standardized
Postpone the customization
inv
Customer inputs
Lead Time
Customer inputs
Lead Time

15. Manufacturing Outsourcing
Outsourcing: contracting another organization to perform a task that was performed in house. Benefits: focus on core competencies, gain expertise, lower wages, no investment to upgrade; Costs: loss of expertise and control.
Off-shoring: outsourcing to an international organization
Trend to outsource manufacturing has been taking place for a while. Some companies outsource almost all of their manufacturing including Nike, and Apple, ….
repeated from previous unit