Because learning changes everything.

Chapter 6

MANUFACTURING PROCESSES

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 Learning Objectives
1. Understand what a manufacturing process is.
2. Understand production process mapping
3. Explain how manufacturing processes are
organized.
4. Product life cycle
5. Product/process design and development.
Stages.

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 A Production Process
Many models out of one Platform
 To reduce the costs associated with the development and
production of products, the automobile industry uses car
platforms.
 The idea is to build what appear to be outwardly distinct
models, and even different types of cars, using the same
basic components.
 Key components that define an automobile platform include
the floorpan, front and rear axles, steering mechanism, front
and rear suspension, and engine/powertrain components.
 The recent push by the Volkswagen Group to develop new
electronic vehicles has resulted in the Premium Platform Electric
(PPE) that is shared between Audi and Porsche. The graphic
illustrates how Audi uses PPE..
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 A Production Process
Many models out of one Platform
 The PPE uses an 800-volt battery and standard efficient cooling
systems, making 80 percent charges in 20 minutes possible. PPE
vehicles have more interior space than internal-combustion vehicles
of a similar size.
 Other features of the PPE platform are single and dual motor
configurations, differential torque vectoring drive, air suspension,
and all-wheel steering.
 All computerized car management is included in the platform,
including throttle and brake controls, navigation, media, and
automatic/ assisted steering.
 The new platform allows Porsche and Audi to introduce distinctly
different lineups of sedans and SUVs quickly and at relatively low
cost. Outwardly, the vehicles look very different, but under the sleek
panels everything is the same.
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 Volkswagen’s Premium Platform Electric (P PE)
and Vehicles

Access the text alternative for slide images.

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 1. Production Processes
• Production processes are used to make everything that we buy ranging
from the apartment building in which we live to the ink pens with which we
write.
• Production processes are used to make any manufactured item.
• Step 1 – Source the parts needed.
• Step 2 – Make the product. Exhibit 6.1
• Step 3 – Deliver the product. Positioning inventory in the supply
chain

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 Production Process
• A supply chain view of this may involve a complex series of
players where subcontractors feed suppliers, suppliers
feed manufacturing plants, manufacturing plants feed
warehouses, and, finally, warehouses feed retailers.
• Depending on the item being produced, the supply chain
can be very long with subcontractors and manufacturing
plants spread out over the globe (such as an automobile or
computer manufacturer) or short where parts are sourced
and the product is made locally (such as a house builder).
• Depending on the strategy of the firm, the capabilities of
manufacturing, and the needs of customers, these
activities are organized to minimize cost while meeting the
competitive priorities necessary to attract customer orders.

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 Production Process Terms
• Customer order decoupling point – where inventory is
• Lean manufacturing – a
positioned to allow processes or entities in the supply
means of achieving high
chain to operate independently.
levels of customer • For example, if a product is stocked at a retailer, the
service with minimal customer pulls the item from the shelf and the
inventory investment. manufacturer never sees a customer order. Inventory
• Lead time – the time acts as a buffer to separate the customer from the
needed to respond to a manufacturing process. Selection of decoupling points is
customer order. Could a strategic decision that determines customer lead times
be years or a few and can greatly impact inventory investment. The closer
this point is to the customer, the quicker the customer
minutes.
can be served.
• A military airplanes, that are
ordered with very specific
• Typically, there is a trade-off where quicker response
uses in mind and that need to to customer demand comes at the expense of greater
be designed and then built to inventory investment because finished goods
the design. In the case of an inventory is more expensive than raw material
airplane, the time needed to inventory. An item in finished goods inventory typically
respond to a customer order, contains all the raw materials needed to produce the
called the lead time , could item. So, from a cost view, it includes the cost of the
easily be years, compared to
material plus the cost to fabricate the finished item.
only a few minutes for the
candy.
• Positioning of the customer order decoupling point is
important in understanding production environments .
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 Types of Firms

 Make-to-Stock
 Assemble-to-Order
 Make-to-Order
 Engineer-to-Order

 Of course, many firms serve a combination of these environments

and a few will have all simultaneously.
 Depending on the environment and the location of the customer
order decoupling point, one would expect inventory concentrated
in finished goods, work-in-process (this is inventory in the
manufacturing process), manufacturing raw material, or at the
supplier, as shown in Exhibit 6.1

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 Make-to-Stock
 A production environment where the customer is served “on-demand”
from finished goods inventory. Firms that serve customers from finished
goods inventory
 Essential issue in satisfying customers is to balance the level of
finished inventory against the level of customer service.
 Examples of products: Televisions, Clothing, Packaged food products.
 Providing more inventory increases costs, so a trade-off between the
costs of the inventory and the level of customer service must be made.
 The trade-off can be improved by better estimates (or knowledge) of
customer demand, by more rapid transportation alternatives, by
speedier production, and by more flexible manufacturing.
 Many make-to-stock firms invest in “Lean manufacturing” programs in
order to achieve higher service levels for a given inventory investment.
 Lean manufacturing – a means of achieving high levels of customer
service with minimal inventory investment.
 Regardless of the trade-offs involved, the focus in the make-to-stock
environment is on providing finished goods where and when the
customers want them.
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 Assemble-to-Order
 Combine a number of preassembled components, subassemblies, and
modules are put together in response to a specific customer order.
 A primary task is to define a customer’s order in terms of alternative
components and options, since these are carried in inventory.
 An example is the way Dell Computer makes their desktop computers.
 One of the capabilities required is an engineering design that enables as
much flexibility as possible in combining components, options and
modules into finished products.
 Similar to make-to-stock, many assemble-to-order companies have
applied lean manufacturing principles to dramatically decrease the time
required to assemble finished goods.
 By doing so, they are delivering customers’ orders so quickly that they
appear to be make-to-stock firms from the perspective of the customer.
 There are significant advantages from moving the customer order
decoupling point from finished goods to components.
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 Assemble-to-Order
 Wide variety of finished goods combinations can be built from a set of
components.
 The number of finished products is usually substantially greater than
the number of components that are combined to produce the finished
product.
 Consider, for example, a computer for which there are four processor
alternatives, three hard-disk drive choices, four memory alternatives,
two speaker systems, and four screens available. If all combinations
of these 17 components are valid, they can be combined into a total of
384 different final configurations. This can be calculated as follows:
 If N, is the number of alternatives for component i, the total number of
combinations of n components (given all are viable) is:
384 = 4x3x4x2x4, It is much easier to manage and forecast the
demand for 17 components than for 384 computers.
Total Number of Combinations = N1  N2    Nn 1  Nn
Where Ni is the number of alternatives for component i
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 Make-to-Order/Engineer-to-Order
• MTO: The product is built directly from raw materials, parts, and
components in response to a specific customer order.
• ETO: Firm works with the customer to design and then make the
product from purchased materials, parts, and components.
• In the make-to-order and engineer-to-order environments, the customer
order decoupling point could be in either raw materials at the
manufacturing site or possibly even with the supplier inventory.
• Boeing’s process for making commercial aircraft is an example of
make-to-order.
• The need for engineering resources in the engineer-to-order case is
somewhat different than make-to-order because engineering
determines what materials will be required and what steps will be
required in manufacturing.
• Depending on how similar the products are, it might not even be
possible to pre-order parts.
• Rather than inventory, the emphasis in these environments may be
more toward managing the capacity of critical resources, such as
engineering and construction crews.
• Lockheed Martin’s Space division uses an engineer-to-order strategy.
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 2. Production Process Mapping
• Develop a high-level map of a supply chain process.
• Useful to understand how material flows and where inventory is held.
• First step in analyzing the flow of material through a production
process. See the Make-to_Stock process map shown below.

Exhibit 6.2
Access the text alternative for slide images.
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 Production Process Mapping
 Consider a simple system that might be typical of many make-
to-stock companies.
 As shown in Exhibit 6.2 , material is purchased from a set of
suppliers and initially staged in raw material inventory.
 The material is used in a manufacturing process where the
product is fabricated (different types of manufacturing processes are
discussed in the next section, “How Production Processes Are
Organized”).
 After fabrication, the product is put into finished goods
inventory, and from here it is shipped according to orders
received from customers.
 Focusing on the Make part of the process, it is useful to
analyze how this step operates using performance measures
that relate to the inventory investment and also how quickly
material flows through the process.
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 Production Process Mapping
 A simplified way of thinking about material in a process is that it is in
one of two states:
1. The first state is where material is moving or “in-transit.” in the
process. This is material that is in-transit between entities in the
process; for example, between the vendor and the raw material
inventory at the manufacturer. Material that is in a manufacturing
process in a factory can also be considered in- transit. We refer to
this material as “work-in-process” inventory.
2. The second state is material that is sitting in inventory and acting as
a “buffer” waiting to be used. Material is held in a storage area and
waits until it is needed. In the case of raw material inventory, the
need is dependent on the factory usage of the item. This buffer
inventory allows different entities in the process to operate relatively
independently.

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 Production Process Mapping
 Work in process refers to manufactured products that move from raw materials to
finished products quickly. For example, a bakery with 50 batches of bread in
production is a work in process. On the other hand, work in progress may refer to
large-scale productions that take longer to complete.
 WIP Inventory: These are products that are currently at some phase of the
manufacturing process. They are in an unfinished state and therefore unable to be
sold. Once a raw material meets human labor, it is considered a work in process.
Finished Goods: These are your final assembled products that are ready to be
sold.
 In transit inventory is inventory that is on order but has not arrived. What is
commonly known as work in process (WIP) inventory is considered a subset of in-
transit inventory. transport time is the Service Hours, expressed as days.
 An inventory buffer is additional inventory kept on-hand in case of emergencies,
transportation delays or surges in demand. Buffer inventory takes up additional
space and can be costly, especially with inventory that has a shelf-life.
 Types of inventory, the four major ones are raw materials and components, work
in progress, finished goods and maintenance, repair and operating supplies.

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 3. Organization of Production Processes

 Process selection refers to the strategic decision of

selecting which kind of production processes to use to
produce a product or provide a service.
 For example, in the case of Toshiba notebook computers,
if the volume is very low, we may just have a worker
manually assemble each computer by hand. In contrast, if
the volume is higher, setting up an assembly line is
appropriate.
 The format by which a facility is arranged is defined by the
general pattern of work flow;
 There are five basic structures (project, work-center,
manufacturing cell, assembly line, and continuous
process). Exhibit 6.3
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 Product-Process Matrix Exhibit 6.3

• It shows the processes approximately on a diagonal. In general, it can be

 The relationship between layout structures is often
argued that it is desirable to design processes along the diagonal.
depicted on a product–process matrix similar to the one
• For example, if we produce nonstandard products at relatively low
shown in Exhibit 6.3 .
volumes, workcenters should be used. A highly standardized product
• Two dimensions are shown. The horizontal dimension
(commodity) produced at high volumes should be produced using an
relates to the volume of a particular product or group of
assembly line or a continuous process, if possible.
standardized products. Standardization is shown on the
• As a result of the advanced manufacturing technology available today,
vertical axis and refers to variations in the product that is
we see that some of the layout structures span relatively large areas of the
produced.
product– process matrix.
• These variations are measured in terms of geometric
• For example, manufacturing cells can be used for a very wide range of
differences, material differences, and so on.
applications, and this has become a popular layout structure that often is
• Standardized products are highly similar from a
employed by manufacturing engineers.
manufacturing processing point of view, whereas low
standardized products require different processes.

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 Organization of Production Processes
Project layout • Visualize the product as the hub of a
 The product (by virtue of its bulk or wheel, with materials and equipment
arranged concentrically around the
weight) remains in a fixed location.
production point in the order of use and
 Manufacturing equipment is moved
movement difficulty.
to the product rather than vice • A high degree of task ordering is
versa. common. To the extent that this task
 Construction sites (houses and ordering, or precedence, determines
bridges) and movie shooting lots production stages, a project layout may
are examples of this format. Items be developed by arranging materials
produced with this type of layout are according to their assembly priority.
typically managed using the project • This procedure would be expected in
management techniques. making a layout for a large machine
 Areas on the site will be designated tool, such as a stamping machine,
for various purposes, such as where manufacturing follows a rigid
material staging, subassembly sequence; assembly is performed from
construction, site access for heavy the ground up, with parts being added
equipment, and a management to the base in almost a building-block
area. fashion.
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 Organization of Production Processes
Workcenter (job shop)
 Where similar equipment or functions are grouped together, such as all
drilling machines in one area and all stamping machines in another.
 A part being worked on travels, according to the established sequence of
operations, from workcenter to workcenter, where the proper machines are
located for each operation.
 Most common approach to developing this type of layout is to arrange
workcenters in a way that optimizes the movement of material.
 Optimal placement often means placing workcenters with high levels of
interdepartmental traffic adjacent to each other.
 Sometimes is referred to as a job shop or department and is focused on a
particular type of operation. Examples include a workcenter for drilling holes, one
for performing grinding operations, and a painting area.
 The workcenters in a low-volume toy factory might consist of shipping and
receiving, plastic molding and stamping, metal forming, sewing, and painting.
 Parts for the toys are fabricated in these workcenters and then sent to the
assembly workcenter, where they are put together. In many installations, optimal
placement often means placing workcenters with large amounts of
interdepartmental traffic adjacent to each other.
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 Organization of Production Processes

Manufacturing cell layout

 Dedicated area where products that are similar in processing requirements
are produced.
 These cells are designed to perform a specific set of processes, and the
cells are dedicated to a limited range of products.
 A firm may have many different cells in a production area, each set up to
produce a single product or a similar group of products efficiently, but
typically at lower volume levels.
 These cells typically are scheduled to produce “as needed” in response to
current customer demand.
 Formed by allocating dissimilar machines to cells that are designed to
work on products that have similar shapes and processing requirements.
 Widely used in metal fabricating, computer chip manufacture, and
assembly work. Exhibit 6.4 a-b-c.

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 Production System Design 1

Assembly line
 Where work processes are arranged according to the progressive
steps by which the product is made. These steps are defined so that a
specific production rate can be achieved. The path for each part is, in effect, a
straight line.
 Discrete products are made by moving from workstation to workstation at a
controlled rate, following the sequence needed to build the product.
 Examples include the assembly of toys, appliances, and automobiles. These
are typically used in high-volume items where the specialized process can be
justified.
 An assembly line is a layout design for the special purpose of building a product
by going through a progressive set of steps.
 The assembly steps are done in areas referred to as “stations,” and typically the
stations are linked by some form of material handling device.
 In addition, usually there is some form of pacing by which the amount of time
allowed at each station is managed.

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 Production System Design 2

Continuous process
 Similar to an assembly line in that production follows a predetermined
sequence of steps, but the flow is continuous, such as with liquids, rather
than discrete.
 Such structures are usually highly automated and, in effect, constitute
one integrated “machine” that may operate 24 hours a day to avoid
expensive shutdowns and start-ups. Conversion and processing of
undifferentiated materials such as petroleum, chemicals, and drugs are
good examples.
 A continuous or flow process is similar to an assembly line except that
the product continuously moves through the process.
 Often, the item being produced by the continuous process is a liquid or
chemical that actually “flows” through the system; this is the origin of the
term.
 A gasoline refinery is a good example of a flow process.

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 4. Product Life Cycle Definitions and Stages

Figure 4-1 Innovation Across a Product’s Life Cycle

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 4. Product Life Cycle Definitions and Stages

Figure 4-1 Innovation Across a Product’s Life Cycle

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 Product Life Cycle Definitions and Stages

Launch: A new product launch is usually the culmination of

an intense product design and development effort. Supply
chain process innovation may be required too if the product
does not make use of existing process technologies and
capacities.
Growth: As sales begin to grow, customer responses give
the firm information about how to refine the product
specifications. Product modifications continue until
standardized forms of the product begin to emerge. During this
growth stage, major investments in process innovation are
usually postponed. Operating processes in the supply chain
must be flexible in accommodating a high mix of low-volume
product orders, and they must be able to rapidly increase
capacity in order to avoid losing sales.

Learning Objective 4-1

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 Product Life Cycle Definitions and Stages
Maturity: Once demand stabilizes and product refinements become
less frequent, costs become more critical because low-cost
competitors often enter the market. Process innovation is usually
needed in this stage to increase supply chain efficiencies. Process
innovation is justified because the product specifications are fairly
stabilized, and early profits have generated funding for process
investments.
Decline: Product maturity may last for many years, yet eventually
products enter a decline stage as customer needs change or as new
technologies supplant existing ones. As demand declines,
operations process managers across the supply chain face intense
pressures to reduce cost and to efficiently decrease capacity. Firms
often try to avoid the decline phase by using incremental product
design and development projects to revitalize products with new or
better features or replace them with next generation products (new
versions of iPads, new types of credit cards, added sites to guided
tours).

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 5. Product/Process Design and
Development: Stages
Concept development
• Identify core product concept
• Conduct market, technical, and financial assessments
• Identify the target values of the product attributes, volume, and
price
• Determine the primary product architecture, including product
variants and components sharing plan
• Propose and investigate production process concepts
Product and process planning
• Decide which components will be designed versus off-the-shelf
• Identify who will design, produce, and assemble the
components
• Specify the types of processes to be used to produce the
product and the structure of the supply chain
• Identify who will develop and supply needed process
technologies
• Develop early prototypes and system-level simulations.
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 Product/Process Design and Development:
Stages
Detailed design and development
• Determine the values of the key design parameters
• Perform detailed design of the components,
including material and process selection, assembly
precedence, and tooling requirements
• Build full-scale prototypes and detailed simulations
Product and market testing
• Conduct full-scale product performance tests and
simulations
• Conduct customer tests
• Design and test critical tools and production
procedures Refine details of product design

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 Product/Process Design and Development:
Stages
Commercialization
• Evaluate pilot production units
• Establish market channels and an order fulfillment system Train sales force and
field service personnel
Market introduction
• Ramp-up production volume, Fill distribution channels
• Launch promotion and advertising campaigns
• Evaluate field experience with product

• Some firms use a disciplined stage-gateTM process developed by Robert G.

Cooper4 to manage costs and risks in product/process innovation projects.
• In this process:
– Resources are committed only on a stage-by-stage basis.
– Near the completion of each stage, senior managers review progress and
make a go/no-go decision to determine if the project should be continued.
– If the decision is go, then resources are provided for the next stage
– At the next gate, the project is reviewed again and another go/no-go
decision is made.
– If the decision is no-go then the project may repeat the stage, or it may be
terminated. Learning Objective 4-3
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 Product/Process Design and Development:
Managing Stages
• The discipline imposed by • The Stage-Gate Process:
the stage-gate approach resources allocated on stage-
has been shown to increase by-stage completion
teamwork, reduce product • Concurrent Engineering:
development time and cost, simultaneous (not sequential)
and identify problems
earlier. • Design for the Customer:
use of multiple customer-
• This approach also helps to focused tools
identify and reduce risks, as
it allows managers to give • Design for Supply Chain
more scrutiny to the Operations: use of multiple
project’s progress before supply chain or product
additional resources are techniques.
committed.

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 Integrated Product/Process Design and
Development: Concurrent Engineering
The stages do not have to be executed in a purely sequential way.
• For example, when developing a new laundry detergent using a sequential approach,
the formula would be developed, then the production process would be designed, then
the product packaging would be designed, and then the sales and advertising plans would
be developed.

• Each development step would be performed by a different functional

group that knows the most about doing that step.
• In reality, however, many activities in each of these steps can be
overlapped using an approach known as concurrent engineering (see
Figure 4-4).
Concurrent engineering (CE) is defined as the simultaneous design
and development of all the processes and information needed to
produce, sell, distribute, and service a product. Other terms sometimes
used in place of CE include simultaneous engineering and integrated
product development. By getting different groups to work together,
concurrent engineering integrates and facilitates cross-functional
communication, leading to better decision making and faster
development.

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 Concurrent Engineering (1 of 2)
Figure 4-4 Overlapped Product Development
Activities: Concurrent Engineering

Learning Objective 4-4

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 Integrated Product/Process Design and
Development: Concurrent Engineering
Operations managers get involved in design and development
activities much earlier than in conventional projects. Consider
the two product development projects depicted in Figure 4-5.
The overall resources spent in new product/process development
can be split into three categories:
• Development costs—spent to fund the design, development,
and testing activities in the development project.
• Sustaining and warranty costs—spent to make changes to
the product design and to production processes needed to
solve problems uncovered both in production and in the field.
This includes costs to repair and replace defective products for
customers.
• Production and sales support costs—spent to promote,
sell, produce, and distribute the product.

Learning Objective 4-3

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 Concurrent Engineering
Figure 4-5 Comparing Resource Expenditures in Functional
and Integrated Product Development Projects

This approach can lower the development

In the functional/sequential development costs because each functional group
project shown in Figure 4-5, the design andfocuses only on its specific development
development stages are pursued tasks. However, interdependencies in
sequentially, without much interaction design decisions at different stages are
among various functional groups. often not fully considered.
Learning Objective 4-4
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 Integrated Product/Process Design and
Development: Concurrent Engineering
• For example, what if a small change in laundry detergent formulation could have
a large impact on manufacturing cost without affecting its washing performance?
Product designers involved in a sequential development project may never be
prompted to consider such a change because they are focused only on product
performance.
• In contrast, the integrated/concurrent engineering approach overlaps the
development activities (as shown in Figure 4-4), and many functional
representatives work together in collocated teams.
• Internal operations managers and suppliers from all parts of the supply
chain participate alongside marketing personnel and design engineers to
codesign the product and its supporting processes. When product and
process designs are developed simultaneously, the interdependencies in
design decisions become more apparent and are more fully considered.
• The integrated/concurrent engineering approach often requires a more
up-front commitment of development resources in order to evaluate a
larger set of design issues earlier in the product development project.
• This concentrated and more thorough design and development effort
provides several important benefits, as illustrated in Figure 4-5:
Learning Objective 4-3
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 Integrated Product/Process Design and
Development: Concurrent Engineering
 First, by overlapping development phases, managers are
usually able to complete the project faster and introduce the
product sooner. Speed to market can be especially valuable if
there are many competitors or if the market window of
opportunity is limited.
 Second, by identifying and solving more product- and process-
related problems before market introduction, product sustaining
and warranty costs can be drastically reduced. It is usually much
cheaper to solve problems in design before expensive
commitments to tooling, production, and other
commercialization processes have been made.
 Finally, by considering product performance specifications and
process design alternatives simultaneously, concurrent
engineering teams are usually able to design supply chain
processes that are more cost effective. Thus, the production and
sales support costs can be lowered over the life of the product.
Learning Objective 4-3
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 Integrated Product/Process Design and
Development: Concurrent Engineering
• The following sections describe procedures that make concurrent
development activities most effective.
• Some are aimed at ensuring that designs meet customers’ needs, and
others are more concerned with the constraints and capabilities of
supply chain operations.
• All of these approaches involve cross-functional teams made up of
marketing, engineering, and supply chain operations personnel.
Categories of Overall Resources Spent in New Product
Development
• Development costs
– Spent to fund the design, development, and testing activities in the
development project
• Sustaining and warranty costs
– Spent to make changes to the product design and production processes
needed to solve problems uncovered both in production and in the field
• Production and sales support costs
– Spent to promote, sell, produce, and distribute the product
Learning Objective 4-3
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 Design for the Customer
 Voice of the Customer (VOC): gather input on
customer’s needs and wants
 Quality Function Deployment (QFD): convert
customer’s needs and wants into specifications
 Failure Modes and Effects Analysis (FMEA):
identification and correction of potential problems
 Value Engineering/Value Analysis: improvement
of benefits and costs through examination of
functionality

Learning Objective 4-5

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 Design for the Customer
• An increasingly important way
Voice of the Customer (VOC):
• The voice of the customer (VOC) for developers to collect
describes a research effort that information about customers’
typically takes place in the early preferences and product uses
phases of a new product or process is to attach sensors to
concept development. products so that they can
• The effort uses customer interviews, monitor customers’ actions.
• No doubt you are aware that,
focus groups, surveys, and other
means to gather detailed data when you use your smart
describing customers’ wishes, needs, phone, computer, and other
likes, and dislikes regarding specific devices, data are created and
product features and functionalities. shared with firms that produce
• In addition to working directly with key the product and accompanying
customer representatives, many services.
• More and more product
companies analyze data generated
through online interactions with designers are incorporating
customers. these types of monitoring
• For example, the Web sites of most major car companies allow technologies into products,
you to select and view the features and colors you want in a
customized car. In industries such as software development,
including automobiles,
lead customers use prototype versions of the software and appliances, furniture, food
provide feedback to developers, a process known as beta
testing. packages, even clothes!
Learning Objective 4-5
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 Design for Supply Chain Operations
• The foregoing approaches focus on the value and performance quality of
goods and service designs.
• Other product design improvement programs focus squarely on
attributes that affect the efficiency or effectiveness of supply chain
operational processes.
Design for X:
• Each of the following “design for” methods focuses on a specific area of
supply chain management. By matching the design of products to the
operational capabilities that exist throughout the supply chain, products
can be made and delivered faster, cheaper, and with better quality.
Design for X approaches use design guidelines and analytical tools to
improve product designs.
• Design for Manufacture (DFM): improvement of product “producibility”
• Design for Assembly: minimizing number of components and easing
assembly processes
• Design for Six Sigma: improving process consistency
• Design for Product Serviceability: easing disassembly and component reuse
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 Design for Supply Chain Operations

Design for Manufacture (DFM):

• It is an umbrella term that describes any of a host of methods and tools
that focus design activities on improving product producibility.
• Producibility is a measure of the speed, ease, cost efficiency, and
reliability with which a product can be produced.
Design for Assembly:
• Minimizing number of components and easing assembly processes
Design for Six Sigma:
• Designers systematically evaluate the consistency with which a good or
service can be produced or delivered given the capabilities of the
processes used.
Design for Product Serviceability:
• Designers focus on easing product disassembly and maintenance, and
on the reuse of product components. For example, cars, computers, and
other equipment usually have modules that can be easily swapped out
and recycled. Learning Objective 4-5
4-43
© McGraw Hill, LLC
 Design for Manufacture: Processes

Design for Logistics:

• Focuses on minimizing the packaging, handling, and shipping
costs for products, primarily by reducing product size and weight,
and by redesigning product packaging.
• Design for reverse-logistics is also important, where products are
designed to be easily returned and refurbished or recycled after
use.
Design for the Environment:
• Seeks to minimize the detrimental environmental impacts of
product and process designs across all stages of a product’s life.
• Typical design-for-environment analyses evaluate product
material and packaging choices to minimize the use of energy and
hazardous materials and carbon impact, and to maximize the
potential for product reuse and recycling.
Learning Objective 4-5
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© McGraw Hill, LLC
 Design for Manufacture: Processes

Robust Design:
• Designers use experiments and simulation models to design products that can
be produced consistently, even when production processes vary greatly.
• For example, designers of corn flakes cereal develop a recipe that yields the
same consistency of product, regardless of the source of the corn, the humidity
or temperature in the production plant, and so on.

Components Standardization:
• Reuses parts and components designs across various products in a product family.
• Fewer new designs means less development cost and time, simplified inventory
management, savings in overhead, personnel, and storage space, and increased
purchasing leverage (lowered prices because volume per part is increased).
• Environmental management is simplified as well. For example, Chrysler recently
went from using 40 different plastic films for wrapping and storing items to one
standard film.
• As a result, they reduced film suppliers from eight to two, reduced the price paid
for film, saved floor space, and made recycling much easier and cheaper.

Learning Objective 4-5

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© McGraw Hill, LLC
 Modular Product Design and Service
Platforms
Modular Product Design:
 For some products, customers demand a wide array of features.
Take razors, for example.
 A company like Gillette designs razors for many different
customers, each wanting a different combination of features.
Some customers want a simple razor while others want advanced
features such as more blades and protection against cuts.
 Others may be more interested in the styling or grip design.
Rather than design an entirely new product variant for each
customer group, it is much more efficient for a company like
Gillette to design a few basic product platforms (razor heads) and
then design modules (handles) that can be added or subtracted
from those platforms to create different combinations of product
features.

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 Modular Product Design and Service
Platforms
• This approach, designing products as combinations of
standardized components and processes, is known as
modular product design.
• Gillette can switch out razor blade sets and handle
components to produce many different product variants with
various levels of functionality and cost.
• This modular approach is used in hundreds of different
products, both goods and services.
– For example, a company that provides guided tours might design basic
packages that can be supplemented with special events to tailor the
experiences to the desires of particular tour groups. By using modular
product designs, operations managers can create efficiencies in supply
chain processes while satisfying a wide variety of customer needs.

Learning Objective 4-5

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 Modular Product Design and
Service Platforms
Service Platform:
• Service platform design takes the concepts of product platforms and modular
design to a whole new level. The most common application of service platform
design is to embed configurable software and network connectivity into a hardware
platform.
• Your smartphone is a prime example. A smartphone is a platform in that it is an
assembly of modular components, both of hardware and software. It is also a
service platform because it uses connectivity (through cellular or wi-fi or other
networks) to deliver all kinds of services, many of which can be configured by the
owner of Companies such as Caterpillar (earth moving equipment) and Rolls-Royce
(aircraft engines) have been using service platform designs for years.
• By embedding on-board monitoring and communication devices on equipment, they
provide improved maintenance and repair services through analysis and prediction
of real-time operating data.
• Recently, however, technology advances have made service platform design
possible for all kinds of goods. In addition to smartphones, designers are
embedding software, sensors, and connectivity into many appliances (washing
machines, etc.), apparel items (running shoes), health and beauty items (razors),
and the list of possibilities seems endless.
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 Modular Product Design and
Service Platforms
Service Platform:
• Some refer to the growth of service platform design as the
servitization of manufacturing. Products that can sense and
connect provide myriad opportunities for value creation, by
improving information, support, and experiences for product users.
• Of course, these devices provide important information to
manufacturers about product usage and customer preferences.
• In the supply chain, sensors and connectivity provide very
valuable, real-time visibility into the location and condition of
equipment and inventories, the status and timing of transactions
(demand and supply), and events (weather, earthquakes, and so
on).
• This visibility helps supply chain operations managers reduce cost
and improve product availability through more accurate planning
Learning Objective 4-5
4-49
and more certain decision making.
© McGraw Hill, LLC
 END

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 Inventory Measures
 A common measure is the total average value of inventory
in the process. From an accounting view, this would be the
sum of the value (at cost) of the raw material + work-in-
process + finished goods inventory.
 This is commonly tracked in accounting systems and
reported in the firm’s financial statements. Although useful
for accounting purposes, these measures are not
particularly useful for evaluating the performance of a
process.
 Consider the total average value of inventory. What is better, a firm that has
$2 million worth of inventory on average or one that has $4 million? This
depends greatly on the size of the firm, the type of strategy being used
(make-to-order or make-to-stock, for example), and the relative cost of the
product being produced.

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 Inventory Measures
 A better measure than the total value of inventory is inventory turn,
which is the cost of goods sold divided by the average inventory
value.
 Because inventory turn scales the amount of inventory by dividing by
the cost of goods sold, this provides a relative measure that has some
comparability, at least across similar firms.
 For two similar consumer products manufacturers, an inventory turn of
six times per year is certainly much better than a firm turning inventory
two times per year.
 A measure directly related is days-of-supply , which is the inverse of
inventory turn scaled to days.
 For example, if a firm turns inventory six times per year, the days of
supply is equal to one-sixth times per year, or approximately every 61
days (this is calculated as 1/6 year × 365 days/year = 60.8 days ).
 Simple systems can be analyzed quickly using a principle known as
Little’s law . Little’s law says there is a long-term relationship between
the inventory, throughput, and flow time of a production system in
steady state. The relationship is:
Inventory = Throughput rate x Flow time
© McGraw Hill, LLC 52
 Inventory Measures
 Throughput is the long-term average rate that items are flowing through
the process.
 Flow time is the time that it takes a unit to flow through the process from
beginning to end. Consider the factory process in Exhibit 2.
 Raw material is brought into the factory and is transformed and then
stored in finished goods inventory.
 The analysis assumes that the process is operating in “steady state,”
meaning that over a long enough period of time the amount that is
produced by the factory is equal to the amount shipped to customers.
 The throughput rate of the process is equal to average demand, and the
process is not producing any excess or shortage.
 If this were not true and the amount produced by the manufacturing
process was greater than demand,
• for example, the finished goods inventory would build over time. So if demand
averages 1,000 units per day and if it takes 20 days for a unit to flow through
the factory, then the expected work-in-process in the factory would be 20,000
units.

© McGraw Hill, LLC 53

 Little’s Law 1

The flow of items through a production process can be

described using Little’s Law: Inventory = Throughput rate ×
Flow time.
• Inventory – materials held by the firm for future use.
• Throughput – long-term average rate that items are flowing through the
process.
• Flow time – time for a single unit to to completely flow through the entire
process.
• We can think of Little’s law as a relationship between units and time.
Inventory is measured in pieces, flow time in days, and throughput in
pieces per day. Therefore, if we divide inventory by throughput, we get
flow time.
• For example, 20,000 units divided by 1,000 units per day is 20 days. We can also take
inventory and divide by flow time and get throughput rate. Here, 20,000 units divided
by 20 days is equal to 1,000 units a day. This conversion is useful when diagnosing a
plant’s performance.

© McGraw Hill, LLC 54

 Little’s Law 1

 Little’s law is actually much more general than a simple

way to convert between units. It can be applied to single
workstations, multistep production lines, factories, or even
entire supply chains.
 Further, it applies to processes with variability in the arrival
rate (or demand rate) and processing time. It can be
applied to single or multiple product systems.
 It even applies to nonproduction systems where inventory
represents people, financial orders, or other entities.
 For our factory, it is common for accounting systems to capture
average work-in-process in terms of the value (at cost) of the
inventory that is being worked on in the factory. For our example,
say that work-in-process averages $200,000 and that each unit is
valued at a cost of $10. This would imply that there are 20,000 units
in the factory (calculated $200,000 ÷ $10 per unit = 20,000 units ).
© McGraw Hill, LLC 55
 Little’s Law 2
Solution: (Example 6.1)
We can split this into two inventories:
work-in-process and raw material.
For the work-in-process, Little’s law can
Example 6.1: Car Batteries An automobile
be directly applied to find the amount of
company assembles cars in a plant and
work-in-process inventory: Inventory =
purchases batteries from a vendor in China. The
Throughput × Flow time.
average cost of each battery is $45. The
Throughput is 200 cars/shift(8 hrs.) or 25
automobile company takes ownership of the
cars per hour and one battery per car it is
batteries when they arrive at the plant. It takes
25/hr. Flow time is 12 hours.
exactly 12 hours to make a car in the plant, and
Work-in-process inventory = 25 × 12 =
the plant assembles 200 cars per 8-hour shift
300 batteries.
(currently, the plant operates one shift per day).
Each car uses one battery. The company holds,
on average, 8,000 batteries in raw material Raw material inventory: 8000 batteries
inventory at the plant as a buffer. Total Inventory = 8000+300 = 8300
batteries.
Assignment:
At a cost of $45 / battery, Values of
a. Find the total number of batteries in the plant
total inventory = 8300*45 = $373500.
on average (in work-in-process at the plant
Days of supply of Raw material
and in raw material inventory).
inventory = 8000/200 = 40 days supply.
b. How much are these batteries worth?
(Assuming first in first out for batteries,
c. How many days of supply are held in raw
it will take 40 days for a typical battery
material inventory on average?
to flow through the raw material
inventory to become work in process.)
© McGraw Hill, LLC 56
 Manufacturing Cell Development
1. Group parts into families that follow a common
sequence of steps. This requires
classifying parts by using some type of A. Original workcehter layout
coding system. In practice, this can
often be quite complex and can require
a computerized system. For the
purpose of the example shown in
Exhibit 6.4A. four “part families” have
already been defined and are identified
Source: Adapted from D. Fogarty and T. Hoffman,
by unique arrow designs. This part of Production and Inventory Management (Cincinnati: South-
the exhibit shows the routing of parts Western Publishing, 1983), p. 472.
when a conventional workcenter-based B. Routing matrix based on flow of parts
layout is used. Here, parts are routed
through the individual workcenters to
be produced.
2. Next, dominant flow patterns are
identified for each part family. This will
be used as the basis for reallocating Exhibit 6.4
equipment to the manufacturing cells.
Exhibit 6.4B
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© McGraw Hill, LLC 57
 Reallocating Machines
Exhibit 6.4C

3. Finally, machines and the

associated processes are
physically regrouped into
cells ( Exhibit 6.4 C).
Often, there will be parts
that cannot be associated
with a family and
specialized machinery that
cannot be placed in any
single cell because of its
general use. These
unattached parts and
machinery are placed in a
“remainder cell.”
Access the text alternative for slide images.
© McGraw Hill, LLC 58
 Assembly Line Design
 The most common assembly line is a moving
conveyor that passes a series of workstations in
a uniform time interval called the workstation
cycle time (which is also the time between
successive units coming off the end of the line).
 At each workstation, work is performed on a
product either by adding parts or by completing
assembly operations.
 The work performed at each station is made up
of many bits of work, termed tasks.

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 Assembly Line Design
 Workstation cycle time  Assembly-line balancing
• A uniform time interval in which a • assigning all tasks to a series of
moving conveyor passes a series of workstations so that the
workstations. required cycle time is met and
• idle time is minimized.
Also the time between successive
units coming off the line. • problem is one of assigning all
• tasks to a series of
At each workstation, work is
workstations so that each
performed on a product either by
workstation has no more work
adding parts or by completing
than can be done in the
assembly operations. The work
workstation cycle time and so
performed at each station is made up
that the unassigned (that is,
of many bits of work, termed tasks.
idle) time across all
• The total work to be performed at a workstations is minimized.
workstation is equal to the sum of the
• The problem is complicated by
tasks assigned to that workstation.
the relationships among tasks
imposed by product design and
process technologies.
 Precedence relationship - the order in which tasks must be performed
in an assembly process.
© McGraw Hill, LLC 60
 Assembly-Line Balancing 1

1. Specify the sequential relationships among tasks using a

precedence diagram.
2. Determine the required workstation cycle time (C).
3. Determine the theoretical minimum number of
workstations (Nt).
4. Select a primary rule to assign tasks to workstations and a
secondary rule to break ties.

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 Assembly-Line Balancing 2

5. Assign tasks (one at a time) to the first workstation until

no more tasks can be added (due to cycle time or
sequencing constraints). Repeat for all subsequent
workstations until all tasks are assigned.
sum of task times
6. Efficiency of the balance 
 #of work stns  Cycle time 
7. If efficiency is unsatisfactory, rebalance using a different
rule.

© McGraw Hill, LLC 62

 Assembly Steps and Times – Example 6.2 2

Example 6.2: Assembly-Line Balancing The Model J Wagon is to

be assembled on a conveyor belt. Five hundred wagons are
required per day. Production time per day is 420 minutes, and the
assembly steps and times for the wagon are given in Exhibit 6.5
next. Assignment: Find the balance that minimizes the number of
workstations, subject to cycle time and precedence constraints.

Solution:
1. Draw precedence diagram (see next two slides.)
2. Calculate Workstation cycle time

Production time per day 60 sec.  420 mins

C   50.4 secs
Output per day 500 wagons

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 Assembly Steps and Times – Example 6.2 1

Exhibit 6.5

Task Time (in Tasks That must

Task seconds) Description Precede
A 45 Position rear axle support and hand fasten -
four screws to nuts.
B 11 Insert rear axle. A
C 9 Tighten rear axle support screws to nuts. B
D 50 Position front axle assembly and hand -
fasten with four screws to nuts.
E 15 Tighten front axle assembly screws. D
F 12 Position rear wheel #1 and fasten hubcap. C
G 12 Position rear wheel #2 and fasten hubcap. C
H 12 Position front wheel #1 and fasten hubcap. E
I 12 Position front wheel #2 and fasten hubcap. E
J 8 Position wagon handle shaft on front axle F, G, H, I
assembly and hand fasten bolt and nut.
K 9 Tighten bolt and nut. J
195

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 Precedence Graph – Example 6.2
Exhibit 6.5

Production Time per Day 60 sec min  420 min. 25, 200 sec
C=    50.4 sec wagon
Output per Day 500 wagons 500 wagons

T 195 seconds
Nt =   3.87  4  rounded up 
C 50.4 seconds

Access the text alternative for slide images.

© McGraw Hill, LLC 65
 Prioritize Tasks – Example 6.2
Prioritize tasks based on the largest number of following tasks.
Task Number of Following Tasks
A 6
B or D 5
C or E 4
F, G, H, or I 2
J 1
K 0
Prioritize tasks in order of longest task time.

Exhibit 6.6
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© McGraw Hill, LLC 66
 Efficiency – Example 6.2

T 195 seconds
Efficiency =   0.77  77%
N a C 5 50.4 seconds 

Exhibit 6.6
Access the text alternative for slide images.
© McGraw Hill, LLC 67
 Reducing Task Time Possibilities
• Split the task – Can we split the task so that complete units
are processed in two workstations?
• Share the task – Can the task be shared so an adjacent
workstation does part of the work?
• Use parallel workstations.
• Use a more skilled worker.
• Work overtime.
• Redesign – It may be possible to redesign the product to
reduce the task time.

© McGraw Hill, LLC 68

 Flexible Line Layouts 1

Source: R. W. Hall, Attaining Manufacturing Excellence (Homewood, IL: Dow Jones-Irwin, 1987), p. 125. Copyright ©
1987 McGraw-Hill Companies Inc.

Exhibit 6.7
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© McGraw Hill, LLC 69
 Flexible Line Layouts 2

Source: R. W. Hall, Attaining Manufacturing Excellence (Homewood, IL: Dow Jones-Irwin, 1987), p. 125. Copyright ©
1987 McGraw-Hill Companies Inc.

Exhibit 6.7
Access the text alternative for slide images.
© McGraw Hill, LLC 70
 Flexible Line Layouts 3

Source: R. W. Hall, Attaining Manufacturing Excellence (Homewood, IL: Dow Jones-Irwin, 1987), p. 125. Copyright ©
1987 McGraw-Hill Companies Inc.

Exhibit 6.7
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© McGraw Hill, LLC 71