Managing the Risks
Each activity will be examined in depth and the associated risks and controls examined
Operations
• Operational Efficiency
• Cost Management
• Inventory Management
• Interruption to production
• Unplanned shutdown
• Production Cycles
• Design Failure
• Reliability
• Maintenance
• Interfaces with other processes
• Product quality
• Productivity
• Capacity planning
• Logistics
• Technology failure
• Obsolescence
• Lack of innovation
• Lack of investment
• Availability of alternative products
• Raw material availability
• Spares
• Research and Development
• Fire and Explosion
• Leaks
• Sabotage
• Production costs
• Forecasting
Systems and Technology
• Compatibility
• Contingency planning
• System Integration
• Information availability
• IT failure
• Security breach
• Lack of information integrity
• Lack of reliability
• Fraud
People
• Strikes
• Loss of key personnel
• Inability to attract new staff
• Skill shortages
• Communication
• Trust
• Performance and Reward
• Workload
• Stress
• Resistance
• Morale
• Staff turnover
• Decision making
Health and Safety
• Personal injury
• Accidents
• Damage
• Contamination
• Disease
• Catastrophic event
• Regulatory non-compliance
• Emissions
• Noise
• Equipment failure
Five risks impacting manufacturing plant
operations
Sensai explains the top five issues impacting manufacturing operations as:
1. Catastrophic equipment failures
When an organization has to delay or shut down operations due to aging or failed machines, this
can have a serious impact on the safety of employees and bottom line of the business. Further, in
order to continue producing at the pace the market demands, companies may have to outsource
repairs and production volume, which can be extremely costly. Overall, legacy equipment can
sometimes be a hindrance for manufacturers and the success of digital transformation due to the
complexity of changeovers, and access to data.
2. Data collection and mining
For factories to be effective, information regarding inventory, supply, deliveries, quality,
production, customer support, processing and day-to-day management must all be analyzed,
monitored and updated on a daily basis. Of extreme importance to the business decisions often
needs to be made using a comprehensive range of data from the production floor, to spreadsheets
and clipboards. Without an efficient system in place, operations managers and their teams waste
a large amount of time searching for the necessary information vital to making critical business
decisions.
3. Information reliability
As important as it is to centralize the data, it is even more important that the data is accurate. If
the data is not reliable, companies may end up choosing the path of most resistance, resulting in
wasted or misused resources and a complex operational process. Manual data entry is prone to
human error, which can lead to poor business decisions that stem from misleading information.
With facilities that are both robotic and manual, operations must still pay close attention to the
actionable data as it comes in, which means there is an additional layer of complexity.
Calculating inaccurate KPI data is something that continues to haunt many production managers
today. With the right technology in place using accurate data, decisions can be made more
effectively and efficiently.
4. Slow onboarding and knowledge loss
When new employees are hired, there is often a steep learning curve, requiring numerous hours
of coaching, training and shadowing veteran employees. However, many companies do not have
the internal resources to properly train and onboard individuals, increasing the likelihood of
operational errors, unapproved work-arounds and more. Alternatively, when organizations lose
top talent to a competitor or retirement, those years of experience walk out the door with them.
Depending on the existing management protocol, both can impact the efficiency and productivity
level of an entire company.
5. Process control
The complex relationship between a machine’s health, the processes’ parameters, and the
material’s conditions, all have a tremendous impact on a manufacturer’s final product. When any
of these elements are not working correctly, it can be detrimental to productivity. Having the
correct process in place to analyze and create robust models gives guidance to operators as to
where to act to optimize performance, quality and uptime. Machine Learning enables smart
process controls, so that corrections can be made automatically and even autonomously
considering all the critical and relevant variables.
To facilitate the identification of risks, several authors have proposed risk classifications.
For example [4] considers business risk (competitor activities, bad weather, inflation, recession,
customer response and availability of resources) and insurable risks (direct property damage, indirect
consequential loss, legal liability, personnel).
The Project Management Institute [8] classifies risk as external-unpredictable (government regulations,
natural hazards, acts of God), external-predictable (cost of money, borrowing rates, raw material
availability), internal-nontechnical (labour stoppages, cash flow problems, safety issues, health benefit
plans), technical (changes in technology, changes in the state of the art, design issues) and legal
(licences, patent rights, lawsuits, subcontractor performance and contractual failure). In a renowned
company (Boeing) the risk categories are: financial, market, technical and production [4].
The ultimate objective of production planning and control, like that of all other manufacturing controls, is to
contribute to the profits of the enterprise. As with inventory management and control, this is accomplished by keeping
the customers satisfied through the meeting of delivery schedules.
The main objectives of PPC may be summarized as followings:-
a)It is used to establish target and check the deviations by comparing on some performance measures.
b) Decides the nature and magnitude of different input factors to produce the output.
c)Coordinates different resources of production system in the most effective and economic manner and to
coordinate among different departments.
d)Elimination of bottleneck
e)Utilization of inventory in the optimal way
f) Smooth flow of material
g) To produce in right quantity and quality at right time
h) Scheduling production activities to meet delivery schedule
i) Expediting the system under production
j) To ensure flexibility in production system to accommodate changes and uncertainty
k) Optimizes the use of resources for minimum overall production cost
l)To ensure the production of right product at right time in right quantity with specification rightly suited to customers
m) Stable production system, with least chaos, confusion and undue hurry.
Design of Operational controlling system:
The complete design process has been explained in brief as follows:
Determination of the time, scope and field of controlling;
Preparation - setting goals and plans;
Selection of parameters, measures and indicators;
Providing proper information sources across organization;
Determining the procedure for monitoring deviations;
Establishing rules for decision-making process;
A decision on the implementation of the system;
Determination of the detailed time schedule and financial resources needed for implementation;
Scope of Operational Controlling System:
a) Nature of Inputs: To manufacture a product, different types of inputs are used. The quality of the product depends upon the
nature of the inputs are used.
Hence the planning is done to determine the nature of various types of inputs which is a complicated process.
b) Quantity of Inputs: To achieve a level of production, determination of quantity of the inputs and their composition is very
important. A product can be prepared only when there is an estimate of the required composition of inputs.
c) Proper Coordination: It ensures the proper coordination among the workforce, machines and equipment. This leads to
avoidance of wastages and smooth flow of production.
d) Better Control: Production planning is the method of control. For a better control, planning is a precondition. Only then, one
can compare the performance and calculate the deviations which lead control of the production.
e)Ensure Uninterrupted Production: The planning of materials ensures the regular supply of raw materials and other
components. The regular flow of materials and supplies are helpful in the uninterrupted production.
f) Capacity Utilization: There is a need to use the available resources effectively. It is helpful in bringing down various costs of
production.
g) Timely Delivered: If there is good production planning and control, there will be timely production and the finished product
will be rushed to the market in time. This also ensures the better relationship with the customers.
Requirements for an effective Operations Control System:
In an organization, control based operations system can be effective only if the following aspects are given due
considerations before implementation:
a)Appropriate organization structure with sufficient delegation of authority and responsibility at various levels of
manpower.
b) Right person should be deputed at right place for right job.
c) Maximum level of standardization of inventory, tooling, manpower, job, workmanship, equipment, etc.
d) Appropriate management decision for production schedule, materials controls, inventory and manpower turnover
and product mix.
e)Flexible production system to adjust any changes in demand, any problem in production or availability of materials
maintenance requirements, etc
f) Estimation of accurate leads times for both manufacturing and purchase.
g) Management information system should be reliable, efficient and supporting.
h) Capacity to produce should be sufficient to meet the demand.
i) The facility should be responsive enough to produce new products change of products mix and be able to change the
production rates.
The important elements may be listed as following:
1. Materials: planning for procurement of raw material, component and spare parts in the right quantities and
specifications at the right time from the right source at the right place. Purchasing, storage, inventory control,
standardization, variety reduction, value analysis and inspection are the other activities associated with material.
2. Method: choosing the best method of processing form several alternatives. It also includes determining the best sequence
of operations (process plan) and planning for tooling, jigs and fixtures etc.
3. Machines and equipment: manufacturing methods are related to production facilities available in production systems.
It involves facilities planning, capacity planning, allocations, and utilization of plant and equipment, machines etc.
4. Manpower: planning for manpower (labour and managerial levels) having appropriate skills and expertise.
5. Routing; determining the flow of work material handling in the plant, and sequence of operations or processing
steps. This is related to consideration of appropriate shop layout plant layout, temporary storage location for raw materials,
component and semi-finished goods, and of materials handling system.
Route Sheet: a route sheet is a document providing information and instructions for converting the raw material
in finished part or product. It defines each step of the production operations and lay down the precise path or route through
which the product will flow during the conversion process.
Route sheet contains following information
a) The operation required at their desired sequence
b) Machines or equipment to be used for each operations
c) Estimated set-up time and operation time per piece
d) Tools, jigs, and fixtures required for operations
e) Detailed drawings of the part, sub-assemblies and final assemblies
f) Specification, dimensions, tolerances, surface finishes and quality standard to be achieved
g) Specification of raw material to be used
h) Speed, feed etc. to be used in machines tools for operations to be carried on.
i) Inspection procedure and metrology tools required for inspection
j) Packing and handling instructions during movement of parts and subassemblies through the operation stages.
6. Estimating: Establishing operation times leading to fixations of performance standards both for worker and machines.
Estimating involves deciding the quantity of the product which needs to be produced and cost involved in it on the basis of sale
forecast. Estimating manpower, machine capacity and material required meeting the planned production targets
are like the key activities before budgeting for resources.
[Link]: machine loading is the process of converting operation schedule into practices in conjunctions with routing.
Machine loading is the process assigning specific jobs to machines, men, or work centers based on relative priorities
and capacity utilization. Loading ensures maximum possible utilization of productive facilities and avoid bottleneck in
production. It’s important to either overloading or under loading the facilities, work centers or machines to ensure
maximum utilization of resources.
[Link]: scheduling ensure that parts and sub-assemblies and finished goods are completed as per required
delivery dates. It provides a timetable for manufacturing activities.
Purpose of scheduling:
a)To prevent unbalance use of time among work and centers and department.
b)To utilize labour such a way that output is produced within established lead time or cycle time so as to deliver the
products on time and complete production in minimum total cost.
[Link]: This is concerned with the execution of the planning functions. It gives necessary authority to start a
particular work which has already planned under routing and scheduling functions.
Dispatching is release of orders and instructions for starting of production in accordance with routing sheet and
scheduling charts.
10. Inspection: This function is related to maintenance of quality in production and of evaluating the efficiency of the
processes, methods and labours so that improvement can be made to achieve the quality standard set by product design.
[Link]: The objective of evaluating is to improve performance. Performance of machines, processes and labour is
evaluated to improve the same.
12. Cost control: Manufacturing cost is controlled by wastage reduction, value analysis, inventory control and efficient
utilization of all resources.