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Summary Design and Planning of Production
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Summary - Design and Planning of ProductionWeek 1
Video 2
Two factories in Groningen:
- Tecnovia Inaxxion: very modern factory. The machining of parts is completely
automated, almost no humans are needed.
- Workman Hoofcare: world player in horseshoes. Old-fashioned.
The modern factory went bankrupt while the old-school factory survived.
Always consider the manufacturing strategy in the design of production systems.
Operations management (OM) is the area of management concerned with designing and
controlling the process of production and redesigning business operations in the production of
goods or services.
Elements of a production system:
- Resources (machines, warehouses)
- People (operators, managers)
- Products (raw materials and parts, finished products)
- Information (demand, stock levels, plans)
Why, when, and how do I get from raw materials to finished products? Decisions. There are
three levels:
1. Strategic level: decisions which shape the long-term capabilities of manufacturing.
2. Design of operations: determine the approach to production organisation and
production control. It’s either product oriented (production line) or process oriented (job
shop).
3. Operational control: day-to-day decisions. Such as scheduling, quality inspection, and
production itself.
Three scientific articles help to structure these decisions:
- Manufacturing strategy: defining the missing link.
The role of manufacturing in a company.
- An empirical analysis of the product-process matrix.
Shows that some decisions are incompatible with each other.
- A resource-based view of manufacturing strategy and the relationship to manufacturing
performance.
Competitive performance through capabilities that cannot be easily replicated.
Article: Manufacturing strategy: defining the missing link.
A manufacturing strategy provides the umbrella under which day-to-day operating decisions
are made. Main choice: competitive priorities: ‘What do you choose to be good at?’ Three ways
(driving forces) to express this choice:
- Dominant orientation: ‘What is my identity?’
- Diversification patterns: ‘Which products do I offer in which markets?’
- Strategy/perspective for growth: ‘What are
my goals and how do I get there?’
Competitive priorities: you can’t be the best at
everything simultaneously so, distinguish order
winners from qualifiers.
- Qualifiers: ‘What is the minimum level of
performance?’ Don’t invest more than
necessary.
- Winners: enables you to distinguish
yourself. Make sure to be on the
performance frontier with order winners,
otherwise your competitors will be.
Competitive priorities
1
,Your competitive priorities must be congruent with your decisions at all levels: identity,
diversification, and growth.
First driving force: dominant orientation
- Market: know what your (potential) customer wants (e.g. Heineken and Apple).
- Product: be an expert in a product, and find new uses for it (e.g. Shell and Tata Steel).
- Technology: be able to exploit the newest technologies in your processes and products,
and push them to the market (e.g. ASML and Tesla).
The dominant orientation drives your focus and culture. Mixing them is risky.
Second driving force: diversification patterns: ‘Back to core business or expand?’
Examples:
- Multiple products in the same market (e.g. Suitsupply).
- Different markets with the ‘same’ product (e.g. Skoda/Volkswagen).
- Multiple links in the supply chain (vertical) (e.g. Netflix Originals who produce their own
movies and series as well).
- Multiple products in different markets: spreading the risk (e.g. Microsoft).
Third driving force: perspective on growth
Opportunities (take new markets, increase return on investment) versus threats (not growing
means competitors will, high growth makes it difficult to stabilise competitive capabilities
(quality, efficiency, and flexibility)).
The manufacturing strategy implements competitive priorities through its driving forces: ‘What
is my focus?’ ‘How do I pursue growth?’
Ford versus Morgan
Differences in production design and control
Video 3
Article: An empirical analysis of the product-process matrix
The product-process matrix shows that there is a limited number of stable combinations of
products and how these products are made.
A major choice in the manufacturing strategy is the process choice.
This article investigates if deviating from the diagonal on the product-process matrix is indeed
uncommon/disadvantageous.
2
,Three basic design decisions of production control:
1. Management/control focus
(scheduling, product development,
etc.) can be based on product or
process.
2. Direction of flow to create a product
o Unidirectional: each product has
the same sequence in production
steps. This is a flow shop.
o Multidirectional: different
products have different
sequences in production steps. This is a job shop. There can be problems with
scheduling and throughput times.
3. Physical layout: ‘How do we physically group machines?’ Based on products, dock,
process or operator.
The main question in production control is how can we organise the production of these
products? Two focuses:
- Within a process focus you put all the resources with similar functionality together.
- Within a product focus we group all machines that we need to create one type of
product together.
If a product must visit multiple departments (process focus), this must be coordinated
somehow. This coordination is the most important inhibitor of flow.
Operations management archetypes:
1. Product orientation
Multiple departments, each responsible for a
product. All necessary processes are done
within the department. No coordination is
needed between departments.
In a product focus, it’s practical to put the
machines that create the product together.
2. Process orientation
Machines are grouped according to the process they perform (functional layout).
3
, Multiple departments, each responsible for a process. Products go from one
department to the next. Coordination is needed.
In a process/functional focus, it’s practical to put the machines that perform the process
together. Otherwise, you could lose oversight of your machines and operators during
the day.
If you distribute machines over different departments, you need lots of coordination and
transportation again. However, the physical layout can still be independent of control and flow.
The location of the machine doesn’t automatically imply the control structure of place in the
flow.
Criteria to choose between product and process focus:
- Are my machines designed specifically for the products? Or are they flexible in what
they can do?
- Are my machines really expensive? If so, I should have high capacity utilisation and
reduce waiting time for the machines.
- Do my customers expect a short lead time? Then, I should try to reduce the waiting
time for the products to get a really high throughput rate.
We discussed three basic design decisions for production systems: control, flow and location.
The combination of decisions leads to a blueprint of the production system and dictates the
appropriate production control techniques. Production control focus, sequence, and physical
characteristics lead to basic process types.
What is my primary focus in manufacturing management: product or machine? Three criteria:
- Are my machines designed especially for the products, or do I produce whatever my
machines allow?
- Do I reduce waiting time for the resources (i.e. high machine utilisation)? Or do I try to
reduce waiting time for the products (i.e. short throughput)?
- Do I physically group machines according to their functionality? Or do I group different
machines physically to produce a certain product?
The three criteria for the product versus process focus are expressed in the volume/variety
trade-off:
- Volume: how many products of a kind are being produced.
- Variety: how many kinds of products are being produced.
Usually, high volume/low variety and low volume/high variety go hand in hand.
We have some archetypical structures in manufacturing, ranging from low volume/high variety
to high volume/low variety:
- Projects
Usually large-scale processes for one or a few unique products. A product might be in
one place during production. In that case, machines/tools/operators go to the product.
- Job shops
Few products of a type, based on customer specifications. So, many different types of
products are possible. Usually small-scale production. Machines and tools are shared
4
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