operations management-siom

8/7/2019 Operations Management-SIOM

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OPERATIONSMANAGEMENT

Introduction


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Contents

1- Operations Management Introduction

2 Manufacturing Planning & Control

3-Demand Management

4-Sales & Operations Planning 5- Master Production Scheduling

6- Material Requirement Planning

7- Just In Time Systems

8- Capacity Planning & utilization 9-Purchasing Management

10- Inventory Management


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What is OM

Operations Management ( OM ) is defined as the

design ,operation , and improvement of the

systems that create and deliver firms primary

products and services. Like marketing andfinance,OM is a functional field of business with

clear line management responsibilities


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The world of Operations in 2020

1-Outsorurcing everything -A firm will focus on its corecompetencies.

2-Smart factories.-Web based CAD ,adaptive Injectionmoulding,self-reconfigering assembly machines

3-Talking Inventory.-The RFID Tags attached to the productensures real time information about inventory.

4-Army of Robots. -Diagnostic infrared sensors allow theengineers to anticipate failures before they actually occur

5-What is in box.-Smart tags and special container satellite

transmitter allow every item being shipped to be monitoredby buyers with detailed information about the containersand condition of each product inside.

6-Unloading Zones Containers are taken off ships byrobotic gantry cranes. RFID Receivers automatically route

goods to the waiting trucks. Reduces manual Labour andcuts unloading time


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The world of Operations in 2020

7-The Lonely road.-Long haul trucks with a singlehuman driver commanding a column of automateddrone trucks linked by wireless remote control

8-Have it your way.- Each unit is tailored to localtastes with final paint ,styling and design touchesdone at local distribution centers.

9-Main street chain store.-Regional experience stores

10-Personalized recommendations.-Shopping cart

detect RFID tags to identify products placed within. 11-Sign here please.-The shopping cart beams the

merchandise total to a transaction station and thecustomer signs the screen to pay.


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DEVELOPMENT OF OM

JIT and TQM

Manufacturing strategy paradigm

Service quality and productivity Total Quality Management & Certification.

Business Process Reengineering.

Supply Chain Management.

Electronic Commerce


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CURRENT ISSUES IN OM

1- Coordinating the relationship betweenmutually supportive but separate organizations.

2-Optimizing global supplier production and

distribution networks. 3-Increased co-production of goods and services.

4-Managing Customer touch points.

5-Raising senior management awareness.


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Case OM in Snacks

You decided to go for snacks along with your

friends. Among various options you can go to a

roadside cart, a snack joint like Udipi restaurant or

some restaurant which serves many thingsincluding full meals, to name few of these choices.

While enjoying the delicious Snacks, what are the

various things you would observe from operations

point of view?


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Om in Snacks

Where they are located? What kind of customers theyintend to serve?

Do they serve while standing or they first seat you?

How big is the seating capacity? How they take orders? How orders are communicated?

Are the items prepared before\after?

Is it customized or standard order?

What are the processes visible to you? Clearing of the table how it is done?

What is extent of Automation?


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Chapter 2

Manufacturing Planning &

Control


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Manufacturing Planning & Control

The MPC system is concerned with planning &controlling all aspects of manufacturing, includingmanaging materials, scheduling machines andpeople , and coordinating suppliers and keycustomers.

The development of an effective MPC system is keyto the success of any company.

MPC systems need to continuously adapt andrespond to changes in the company environment,strategy, customer requirements, problems & newsupply chain opportunities


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Three keyareas of influence on MPC

I-Internationalization Growth in international markets, bothdemand & supply ,has had a major impact on MPC systemdesign & execution.

The shifting requirements in international collaborations havegiven new meaning to the expression supply chain. Asopportunities arise and conditions change, the members ofparticular supply network will change with unpredictable timings.There are occasions when a firm will be both supplier andcustomer to same firm, while supplying their competitors andcustomers. These shifting networks have given rise to a veryspecial need to have MPC systems that are transportable,international, transparent and effective.


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Three areas of influence on MPC

2-The role of customer -The requirement of customerresponsiveness and improved service must also matchthe global expansion of business, and hence push forlower inventories, faster response and lower transaction

costs means demand on MPC

system are of customerintegration & responsiveness.

Mass customization implies flexibility to produce avariety of products to meet increasing customer demandsand flexibility of processes to meet whatever volumeresponsiveness is required.

The capability to reorganize customer preferences andmove thru the supply network in response to customerdemands is an important dimension of the MPC system.


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Three areas of influence on MPC

3- Increasing use of IT Global coordination and communicationhas been due to rapid deployment of IT particularly ERP.

Facilitates the need for common data, compatible procedures forhandling information, effective communication within andbetween firms, a common means for accomplishing tasks

ERP systems built over a common database has provided meansfor linking functionally disparate, geographically and culturallydifferent organizational units into a unified system.

ERP systems provide common data ,common procedures ,realtime data availability for coordinated decision making in globally

dispersed organizations. ERP allowed firms to move beyond the concept of lean

manufacturing with its factory focus to lean organization witha business unit focus. The focus is now on lean supply chains


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The MPC System

Task of MPC system is to manage efficient flow of materials, theutilization of people & equipments, and to respond to customerrequirements by utilizing the capacity of suppliers, internal facilities.

The MPC system does not make decisions nor manage theoperations-managers perform those activities. The MPC system

provides support. The issue addressed by the MPC system is matching supply &

demand in terms of volume & mix.

Hence the focus on material & production capacity needed to meetcustomer requirements. This means planning for the right quantitiesof materials to arrive at right time and place to support product

production & distribution. Means maintaining appropriate levels of raw materials,WIP &

Finished goods inventories in the correct location to meet marketneeds.


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The MPC system

In the short term detailed scheduling of resources are required to meetproduction requirements. This involves time ,people,material.equipments &facilities.

On day to day basis, the MPC system must keep a track the use of resources &execution results to report on material consumption,Labour utilization,performance.

In order to effectively manage the manufacturing processes number ofmanufacturing performance indicators such as output results ,equipmentutilization,& costs associated with other departments ,need to be monitored.

Also measures of customer satisfaction such as late deliveries, product returns,quantity errors are required to be measured.

The MP C system at NOKIA is designed to enable it to match product capability

with market demand on both price & features. It has global advantages such as a)-A wide variety of products that meet customer needs all around the world

from high sophistication to minimum functionality.

b)- An efficiency of production that enables it to provide Cell phones to thewireless carriers at very low cost, thereby expanding global volumes.

c)- The ability to incorporate innovative concepts into its product's with greatspeed & frequency.


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Objectives of MPC system

1-To deliver quality goods in required quantities to the

customer in the desired delivery schedule.

2-To ensure maximum utilization of resources.

3-To ensure production of all quality products. 4-To minimize the product throughput time.

5-To maintain optimum Inventory levels.

6-To maintain flexibility in manufacturing operations.

7-To plan for plant capacities for future requirements.

8-To ensure effective cost reduction \ cost control.

9-To prepare production schedules in line with

requirements.

10-To contribute to the profit of the enterprise.


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Scope of MPC

1-Materials Procurement of materials.

2-Methods-Choosing the best alternative of manufacturing.

3-Machines\Equipments Manufacturing methods are related toproduction facilities available in the production system.

4-Manpower-Planning for manpower having appropriate skills &expertise.

5-Routing-Determining the flow of material handling eg Store,Shop ,Plant layout.

6-Estimating Performance standards for workers\machines.

7-Expediting-Progress review. 8-Evaluating Improve performance of machines\workers.

9-Cost control-Wastage reduction, value analysis, Inventorycontrol


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Benefits of MPC

1-Maintenance of balanced inventory ,WIP,FGS

2-Balanced\ stabilized production.

3-Maximum utilization of Worker, Machine ,

Storage space. 4-Reduction in scrap\rework costs.

5-Reduction in Inventory costs.

6-Reliable delivery to customer. 7-Shortened Lead times.

8-Orderly planning for new \improved products.


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Chapter 3

Demand Management


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Forecasting-Characteristics

i-Forecasting are vital to every businessorganization and for every significantmanagement decision.

ii-Forecasting is the basis of corporate long termplanning.

iii-In functional areas of Finance\Accounting,forecasts provide the basis of budgetary

planning & cost control. iv-Marketing relies on Sales forecasting to plan

new products.


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Forecasting-Characteristics (Contd.)

v-Production\Operations use forecasts to makeperiodic decisions involving process selection,capacity planning ,facility layout.

vi-Forecasts are never accurate. Too many factorsin the business environment can not be predictedwith certainty.

vii- Hence ensure continual review of forecasts

and learn to live with inaccurate forecasts. viii- A good strategy is to use 2\3 methods and

look them with common sense.


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Forecasting-Characteristics (contd.)

ix- Will expected change in the economy affect

the forecast?

x- Are there changes in Industrial\private

consumer behavior ?

xi- Will there be shortage of essential

commodities\complementary items?

xii-Continual review and updating in the light ofnew data are basics to successful forecasting


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PlanningandControllingthe SupplyChain

Forecasting-Demand Management

i)-Dependent Demand-is the demand for Products

\Services caused by the demand for other products.

ii)-Independent Demand-The demand can not bedirectly from that of other Products.


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Demand Management

1 Take an active role to influence demand Thefirm can apply pressure on its Sales force, it canoffer incentive to both customers\own sales force.

It can wage campaigns to sell products, and itcan cut prices.

These actions can increase demand.

2- Take passive role If the firm is running at full

capacity ,it may not want to increase demand. Also Firm does not have budget to advertise, the

market may be fixed in size or static


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Types Of Forecasting

1-Qualitative-Subjective,Judgemental

i-Grass roots -Input from the Salesman closest toCustomer.

ii-Market research.-Surveys,Research,Interview. iii-Panel Consensus -Free open exchange in

meetings.

iv-Historical analogy -Ties with a Forecast ofsimilar item

v-Delphi Method -Group of experts respond toquestionnaire


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Types of Forecasting

2-Time Series Models-

i-Simple Moving Average.

ii-Weighted Moving Average.

iii-Exponential Smoothing Recent data are weighted

more with weighing declining progressively as databecomes older.

iv-Regression Analysis- Relating to data value to time.

v-Box Jenkins technique- -Relates to a class of Statisticaldata and fits the model to time series.

vi-Shiskin time series -Decomposes a time series into

seasonal, trends and irregular. vii-Trend Projections Follows a mathematical trend line

and projects future.


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3- Casual- Sales may be affected by Advertising,Competition etc.

i-Regression analysis Similar to time series but containmultiple variables.

ii-Econometric models -Attempts to describe some sectorof economy by series of independent equations.

iii-Input\Output models Focuses on Sales of eachindustry to other firms \ Governments

iv-Leading indications Statistics that move in the samedirection. Say with Petrol price increase, the sale of Carscomes down.


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4-Simulation -Dynamic models, usually

Computer based, that allows Forecaster to make

assumptions about the internal variables and

external environment.

Say if price is increased by 10 %, what effect on

Sales ?


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Chapter -4

Sales & Operational

Planning


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Aggregate Sales & Operations Planning

Translates annual and quarterly plans into broad

Labour and output Plans for 3 to 18 months. The

objective is to minimize the cost of resources.

Long range Planning Normally done annually andfocuses on a horizon of 1- 5 years.

Intermediate range Planning Covers a period of

3- 18 months.

Short term Planning Covers a period less than 6

months.


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Capacity Time Horizons

Long Rage Planning Resource Planning of Land,facilities, equipment & human resources.Involves strategy of changing facilities for

employment levels over long time horizon. Intermediate Range Planning Resources required

to satisfy MPS. Managing through work force re-allocation inventory ,subcontracting strategies.

Short Range Capacity control of inputs-outputs& operational sequencing. Managing idle time,overtime, work force re-allocation.


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Sales & Operational Planning

Sales & Operational Planning is a process to helpgive better customer service, lower inventories,shorten customer Lead times, stabilize production

rates and give top management a handle on thebusiness.

The process is built up on team work betweensales ,operations ,finance & product

development. The process is designed to help company get

demand and supply balance regularly..


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Sales & Operations Planning (contd.)

The process consists of a series of meetings,

finishing with a high level meeting where key

intermediate term decisions are made. The end goal

is a agreement between various departments on thebest course of action to achieve the optimal balance

between supply demand and put operational plan

in line with business plan.

This balance must occur at an aggregate ( major groupof products ) level and also at the detailed individual

product level


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Sales & Operational Planning (contd.)

Over time we need to ensure that we have enoughtotal capacity. Since demand is quite dynamic, it isimportant to monitor our expected needs 3 to 18months or further in future.

While planning this far for the future, it is difficult toknow exactly how many of a particular product , wewill need, but we should be able to know how alarger group of similar products will sell.

The term aggregate refers to this group of products.With enough aggregate capacity, we should be ableto handle daily \weekly scheduling of individualproducts.


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Key Terms

Sales & Operational Planning Demand and Supplybalance.

MPS( Master Production Schedule) A schedule of amountsand times when specific items will be manufactured.

Rough Cut Planning Verification that sufficient capacityexists to meet MPS schedule.

Material Requirement Planning ( MRP) Generates specificschedules for Piece parts \ Components.

Capacity Requirement Planning Allocation of Productionresources capacity to specific orders.


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Key Terms

Work Center An area in a business in which productiveresources are organized and work is completed.

Infinite loading Work is assigned to a Work center basedon what is needed over time. Capacity is not considered.

Finite Loading The system determines exactly what will bedone by each resource at every moment during the workingday.

Forward Scheduling Likely period when the Order will becompleted.

Backward Scheduling Tells the latest tine when an ordercan be started so that it is completed by a specific date.


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Key Terms

Order Scheduling Final planning of the use ofspecific Machines.

Production rate The number of units completedper unit of time.

Work force Level The no of Production workersneeded for each period.

Inventory on hand Unused inventory carried fromprevious period.

Production Planning Strategies Trade offs betweenWorkers, Work Hours, Inventory, backlog.


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Key Terms

Pure Strategy A Plan that uses just one option

available for meeting the demand.

Mixed Strategy A Plan that combines options

available for meeting demand.

Yield Management Allocating the right type of

capacity to the right type of customer at the right

price and time to maximize revenue


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Chapter-5

Master Production

Schedule


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Master Production Scheduling -Activity

i) -The MPS translated the sales & operational plans of the company into a plan forproducing specific products in future

ii)-Sales & operation plan provides an aggregate statement of manufacturing outputrequired to reach company objectives.

iii)-The MPS is a statement of the specific products that make up the output.

iv)- The MPS is the translation of sales & operation plan into producible productswith their quantities & timings..

v) The MPS shows when products will be available in the future enabling sales togive delivery commitments to customer.

vi ) When availably vs. demand do not match ,the MPS forms the basis of trade-off.

vi) The forecast is an important input into the planning process that determines theMPS

vii)- The MPS considers capacity limitations ,the cost of production, resourcesconsideration & sales and operation plan.

viii)- The MPS forms the basis of communication between market & manufacturing.

ix) The MPS units might be in options or modules from which a variety of productscould be assembled.


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MPS - Techniques

1- The Time Phased Record

2- Rolling through time

3 Order promising

4 Consuming the forecast


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BOM Structuring for MPS-Definitions

Bill of Materials is considered to be an engineering document that specifies the

ingredients or subordinates components required to make each part \ Assembly.

Single level BOM comprises only those subordinate components that are

immediately required, not the component of components.

Indented BOM is a list of componants,from the end item all the way down toraw material ,components of components.

BOM files are computer records designed to provide desired output formats.

BOM structure relates to the architecture or overall design for the arrangement

of BOM files. The BOM structure must be such that all desired output formats \

reports can be provided.

BOM processor Is a computer software package that organizes and maintains

linkages in the bill of materials files as is defined by bom structure.

Low level code number These are numbers where in the product a particular

part \ sub-assembly is with respect to the end item.


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The Final Assembly Schedule

The MPS represents an anticipated build schedule.

The FAS is actual build schedule.

The MPs disaggregates the production plan into end items, options orgroup of items.

The FAS is the last disaggregation into exact end item definitions.

The MPS generally incorporates forecasts or estimates of actualcustomer orders in preparation, with actual orders thereafter imperfectlyconsuming these forecasts.

The FAS is the last possible adjustment that can be made to the MPS.

Hence it is advisable to make the adjustment as late as possible. Any unsold item in FAS will become finished inventory.


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The MPS Scheduler

The MPS scheduler's job to convert planned orders into firm plannedorders and to manage the timing and amounts of the firm plannedorders. Means any change has to be carefully evaluated in terms oftheir impact on MPS & capacity .the key to understand the tradeoffsbetween customer needs and other MPC system objectives.

The Scheduler has the primary responsibility for making any additions \changes to MPS record.

The Scheduler has also the responsibility for disaggregating theproduction plan to create the MPS and for ensuring that the sum of thedetailed MPS production decisions match the production plan. Thisinvolves analyzing trade offs & informing Management about theimplications.

The Scheduler also monitors the actual performance for analysis byhigher management.

The scheduler is generally also responsible for launching the finalassembly schedule

The activities also include interface with order entry plus ongoingrelationship with production to evaluate the feasibility of suggested

changes.


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Material Requirement Planning ( MRP)

MRP is a logical approach to the problem ofdetermining the number of Parts \Components andmaterials needed to produce each item.

Manufacturing Resource Planning II An expandedversion of MRP that integrates finance ,accounts,business processes into the production scheduling.

Flow manufacturing Integrates and plan

capabilities of MRP with JIT \ Kanban system.


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Chapter -6

Material Requirement

Planning


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Material Requirement Planning

i)- MRP is a basic tool for performing the detailed material planningfunction in the manufacture of component parts and their assemblyinto finished items.

ii)-MRP is used by many companies that have invested in batchproduction processes.

iii)-MRPs objective is to provide the right part at the right time to meetthe delivery schedules for finished products.

iv)- MRP provides plans for each part number ,whether raw material,component or finished good.

v)- This is required to be accomplished without excess inventory ,shortages ,overtime on underutilization of other resources.

vi) The MRP requires the inputs of MPS ,Bill of Materials & Inventorystatus.

vii) An MRP system serves as a central role in material planning andcontrol .

viii)- It translates overall plans for production into detailed individual

steps necessary to accomplish those plans.


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The Basic MRP Record

1- Gross requirement The anticipated future usage or demand for the item duringeach defined period.

2 Scheduled receipts Existing replenishment orders for the item due in thebeginning of each period.

3 Projected available balance The current and projected status for the end of itemat the end of each period.

4 Planned order releases Planned replenishment orders for the item at thebeginning of each period.

5 Time bucket Period for which the MRP is planned.

6 Net requirement The difference between gross requirement & availableinventory.

7 Action bucket When a planned order is created for the current period.

8 Explosion is the process of translating product requirement into component partrequirement, taking existing inventories & scheduled receipts into account.


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MRP Processing frequency

As conditions change and new information is received ,the MRP recordsmust be brought up to date so plans can be adjusted. This meansprocessing the MRP records anew, incorporating current information.

Processing all the records in one computer run is called regeneration,

means all records are completely reconstructed. This can generate avery large processing requirement on the system.

Hence a frequency of regeneration is required to be determined.

Processing less frequently is that the component status becomes out ofdate and inaccurate. This leads to inventory imbalance, scrap,requirement changes, stock corrections ,which leads to poor planning.

Similarly more frequent processing of MRP records increases Computercosts but results into more accurate planning.

Hence process only those changes which are affected by change.

This is called netchange approach.


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Definitions

Pegging Relates all the gross requirements for apart to be planned order releases or other sources ofdemand that created the requirements. The peggingrecords contain the specific part numbers of the

sources of all gross requirements. Service parts Service parts demand must be

included in the MRP record .The service part demandis based on forecast and is added directly into thegross requirements for the part. From the MRP

system point of view, the service part demand isanother source of gross requirement for a part andthe sources of all gross requirements are maintainedthru pegging records.


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Definitions

Scheduled Receipts vs. Planned orders A trueunderstanding of MRP requires knowledge of certain keydifferences between a scheduled receipt and a plannedorder. The scheduled receipt represents a commitment,whereas the planned order is only a plan the former isdifficult to change than the latter. A scheduled receipt fora purchased item mean a P O ,which is a commitment,which has been prepared. Similarly a scheduled receiptfor manufactured item mean a shop order. Raw materials& component parts have been committed to that order

and no longer available for other needs. The planned order releases explode to gross

requirements, but scheduled receipts( open orders) donot.


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The MRP Planner-Responsibilities

1 Release orders to Purchase \ Shop

2 Reschedule due dates of existing open orders when desirable .

3 Analyze & update system planning factors for the part

numbers under its control. Involves changing lot sizes ,Lead time,Scrap allowance or Safety stocks.

4 Reconcile errors or inconsistencies ,try remove root cause ofthese errors.

5 Find key problem areas requiring action ensure avoidingfuture crisis.

6 Use the system to solve critical material shortages problemsso actions can be captured in the records of next processing.Means Planner works within formal MRP rules, not by informalmethods.


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Definitions

Order Launching is the process of releasing orders to theshop or Vendors\Purchase Order launching converts theplanned orders into a scheduled receipt reflecting the Leadtime offset. Order Launching is the opening of shop \POs,closing these order occurs when scheduled receipts are

received into the stock. At that time ,transaction must be processes-to increase the on-

hand inventory and eliminate the scheduled receipt.

The orders indicated by MRP as ready for launching are afunction of lot sizing procedures and safety stocks..A key

responsibility of planner is managing with awareness of theimplications. When an order is launched, it is necessary toinclude rejection allowance and hence the order quantity willget augmented by rejection percentage.


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Chapter -7

Just In Time Systems


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Elements ofJIT

JIT is an approach to minimize waste in manufacturing.

JIT helps to subdivide waste into time, energy ,material & errors.

JIT is a philosophy of pursuing zero inventories, zero transactions andzero disturbances ( routine execution of schedules ).

The best known examples of JIT are from firms with high volumerepetitive manufacturing methods such as Toyota.

The most important features of these applications have beenelimination of discrete manufacturing batches in favour of productionrate goals, the reduction of WIP , production schedules that level thecapacity loads & keep them level ,mixed model master schedules,

where all products are made more or less all the time ,visual controlsystems ,where workers build the products and execute the schedulewithout paperwork and direct ties to Vendors who deliver high qualityproducts frequently.


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Elements ofJIT

JIT objectives require physical system change & programs to make thechanges.

A prime example is set up time reduction and producing smaller lots. Itis also consistent with reducing inventory levels. Set up times are

reduced by applying common industrial engineering techniques toanalyze the set up process itself., often by workers themselves.

Changeovers of several hours have been reduced to less than 10minutes. This is expressed by Shigeo Shingo : S M E D

Another physical program is improved quality through processimprovements.

Most JIT firms have programs of quality awareness & statistical processcontrol. In a repetitive manufacturing system, any quality problem willresult into stoppage of entire flow line.


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Elements ofJIT

Two critical aspects of JIT are TPM & poka -yoke .TPM can stand for both totalpreventive & productive maintenance. The goal is to apply the diligence ofproduct quality improvement to equipment & process quality.

Poka-yoke means foolproof operations. this is achieved by building checkingoperations into processes so that quality is evaluated as it is created. This also

ensures low cost through finding defects at the time they are created. Most JIT programs include continual improvement for day to day operations.

Every day ,each worker should get better in some dimension, such as fewerdefects, more output ,or fewer stopagges.Continual improvement is achieved bymaking thousands of small improvements in methods & products in a neverending quest for excellence.

JIT best practices include a strong degree of worker involvement & participation.


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Elements ofJIT

JIT firms often group their equipment for cellular manufacturing, a group of machinesmanufactures a particular set of parts. The equipment layout minimizes travel distances &inventories between machines.

Cells are normally U shaped to increase worker interactions & reduce material handling.

Cross trained workers can handle several machines.

Cellular manufacturing makes capacity more flexible ,so surges or mix changes are more

readily handled. An extension of the cellular concept is the plant within a plant, where a portion of a

factory focuses solely on one group of products.

Hence JIT includes

Reduction of set up time

A no defects goal in manufacturing.

A focus on continual improvement.

Worker involvement.

Cellular manufacturing

TPM & Poka-yoke


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JIT impact on MPC

JIT influences all three areas of our MPC framework ( Front end, engine & backend )

JITs primary contribution is in the back end, providing greatly streamlinedexecution on the shop floor & purchasing.

JIT can eliminate standard shop floor reporting systems, reduce costs of shopscheduling, reduce WIP ,Lead time ,& better Vendor scheduling.

In the front end JIT also gives rise to important changes.

JIT production plans & master production schedules require level capacityloading for smooth shop operations.

In many cases, this is rate-based MPS that is producing so many units per hour\day.

This drive towards more stable,level,daily mix schedules dictates many of therequired JIT activities, such bas set up time reduction. To the extent Lead timesare sufficiently reduced, many firms had to provide inventories in anticipati9onof customer orders.( make to stock )


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JIT benefits

Manufacturing Throughput Time reduction.

Materials moved shorter distances.

Less material movement.

Reduced transaction.

Simplified MPC

system. Reduced changeover times.

Creative responsiveness to market demands.

Inventory reductions.

Labour cost reductions.

More satisfied workman.

Better team working. Space reductions.

Quality cost reductions.

Quality improvements.


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The JIT execution

In JIT execution, orders move through the factory so quickly thatit is not necessary to track their progress with a complexproduction activity control system. A similar argument hold goodfor purchased items. If they are converted into finished good in avery short time,it is unnecessary to put them into stocks. Pick

them & go through all the details normally associated withreceipts from vendors. Instead the JIT firm can simply pay thevendor for the purchased items in whatever products arecompleted each time period, there will be so less WIP that it is notworth keeping track of it.

The concept of updating component inventory balances when

finished items are received into stock is called backflushing. JIT execution is focused on simplicity. The intent is to design

manufacturing cells, products , & systems so goods flowsmoothly.

With problems of quality \ disturbances is reduced considerably,the routine becomes simple.


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Definitions

Logistical transaction Include ordering ,execution ,,confirmation ofmaterials moving from one location to another, cost of personnel in Receiving ,shipping,expediting ,data entry ,data processing ,accounting. Under JIT the majority of this work iseliminated .Work Orders are eliminated.

Balancing transaction are associated with planning that generateslogistical transactions. Includes are production control ,purchasing ,master scheduling,forecasting , customer order processing.

Quality transactions Included are identification \ communication ofspecifications, certification that other transactions have taken place & recording of backup data.

Change transactions Included are engineering changes and all thosethat update MPC system ,such as BOM ,specifications, Engineering changes, which mayrequire meeting people from production control, line management ,design engineering,manufacturing engineering ,purchasing etc.


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JIT Objectives & BuildingBlocks

Objectives Building blocks

Zero Inventory Product design

Zero Lead time Few BOM levels Zero failures Mfg. Production cell

Flow process Achievable quality

Flexible mfg. Appropriate quality

Eliminate waste Standard parts

Inventory reduction Modular design.


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JIT objectives & BuildingBlocks

Process design Human\Organization

SMED Cross training

Lot size reduction Job rotation

Quality improvement flexible Labour

Mfg Cells Kaizen

Reduced WIP Whole person

No Store KPIs

Service enhancement MIS change


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JIT Objectives & BuildingBlocks

Manufacturing Planning & Control Pull system

Rapid flow times

Smaller container sizes

Paperless system Visual system

Level Loading

MRP interface

Vendor partnership

JIT software Transaction processing

Hidden Factory cost reductions.


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Pull System\ Kanban

A PULL system exists when a work center is authorized to produceonly when it has been signaled that there is a need for more parts in auser department.

No work center is allowed to produce parts just to keep workers \

equipment busy. It also means that no work center is allowed to PUSH material to

downstream work center.

All movements and production are authorized by a signal from adownstream work center when it has a need for component parts.

Primary payoffs comes from the discipline required to make the system

work. Included are Lot size reduction ,Limited WIP , fast throughput, assured

quality.


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Toyota's Kanban System

The production system at Toyota is the most advanced JIT system in the world.

Toyota turns its inventory 10 times faster than Us & European Car manufactures & 50 %faster than its Japanese competitors

The information system in Toyota encompasses the MPC activities necessary to support

JIT execution. Kanban is Toyota's technique for controlling material flows

The following rules keep the system operating

i)-Each container of parts must have a kanban card.

ii)_The parts are always pulled. The using department must come to the providing dept. &not vice versa.

iii)- No parts must be obtained without a conveyance kanban card. iv)-All containers contain their standard quantities and only the standard container for the

parts to be used.

v)-No extra production is permitted. Production can be started only on receipt ofproduction kanban card.


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Chapter- 8

Capacity Plans &

Utilization


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Chapter-9

Purchasing Management


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Chapter-10

Inventory Management

operations management-siom

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