Restructuring Operations for Selected competitive Strategies

1. Restructuring Operations for Selected competitive Strategies Business World Entrepreneurs Forum Series Cebu International Convention Center June 21, 2008 Center for Lean Systems and Management Department of Industrial Engineering

2. The Need for Manufacturing Competitiveness • “Make an increasing variety of products, on shorter lead times with smaller runs, but with flawless quality. Mechanize – but keep your schedules flexible, your inventories low, your capital costs minimal, and your work force contended” Center for Lean Systems and Management Department of Industrial Engineering

3. The Need for Manufacturing Competitiveness • “Improve our return on our investment by automating and introducing new technology in processes and materials so that we can cut prices to meet local and foreign competition.” Wickham Skinner, Harvard Business Review, 1966 Center for Lean Systems and Management Department of Industrial Engineering

4. Signs of the Time • Growth of Government regulation, Taxes, and Intrusion into business affairs • Deterioration of work ethics by workers • Adversary relationship between workers and employers • Interruptions in raw supply due to rapid changes in prices (i.e. oil) and wage increases • Job mismatch of labor skills • High cost of capital and increase in inflation Center for Lean Systems and Management Department of Industrial Engineering

5. Is this a reflection of our current condition? • All these happened in the United States during 1980s • They also happened to the rest of the world. • The same scenario is being depicted in the Philippines against Vietnam, Laos, Cambodia, Indonesia, Thailand, Malaysia, Japan, Singapore and even China. Source: Restoring our Competitive Edge by Hayes and Wheelright Center for Lean Systems and Management Department of Industrial Engineering

6. Learning from History (Even before 1970s up to the Present) • Stagnation in productivity did not begin during these times. It predated these events! • The same forces affected the other countries of the world and yet they suffered less in productivity decline. Center for Lean Systems and Management Department of Industrial Engineering

7. What are the common views? • Change government tax laws, monetary policies, and regulatory practices • More reasonable “Unions” • Developing alternative energy sources • Government, Inflation, Rising Prices, Labor, etc. are all contributing factors to Productivity. But this is universal! Source: Restoring our Competitive Edge by Hayes and Wheelright Center for Lean Systems and Management Department of Industrial Engineering

8. Most important and constant factor of Productivity • Management is the most important and most variable across companies all over the world. • A fundamental change in mind set on its ability to produce better products (and services) using better manufacturing and operation practices  Competitive Strategy. Center for Lean Systems and Management Department of Industrial Engineering

9. Role of Management in addressing Productivity • Short Term – using existing assets more efficiently on existing products. • Medium Term – Substituting existing resources for new sets. • Long Term – Develop new products and processes that address the same concerns at a higher level of productivity. Source: Restoring our Competitive Edge by Hayes and Wheelright Center for Lean Systems and Management Department of Industrial Engineering

10. What is Manufacturing (Operations) Strategy? • Strategy - a series of intended decisions (pattern of decisions) • A consistent set of manufacturing decisions that support the desired competitive advantage. • A set of manufacturing capabilities that it will enable it to pursue its chosen competitive strategy over the long term Center for Lean Systems and Management Department of Industrial Engineering

11. Capacity Facility Technology Organization Workforce Quality Production Planning and Control What are the decision in your Manufacturing (Operations) Strategy? Center for Lean Systems and Management Department of Industrial Engineering

12. Role of Manufacturing • Common Perception: • To simply “assist” or support in the implementation of total management strategy • Manufacturing must take a proactive role in defining the company’s strategy. • Challenge the role of manufacturing Center for Lean Systems and Management Department of Industrial Engineering

13. Changes in Manufacturing Strategy Source: Operations Management by Heizer and Render Center for Lean Systems and Management Department of Industrial Engineering

14. Manufacturing Strategy Choices • To Produce the Quantities (Flexibility) • To Produce at Desired Quality (Quality) • To Produce on Time (Service/Delivery) • To Produce at Acceptable Cost (Cost) Center for Lean Systems and Management Department of Industrial Engineering

15. Craft Production Job Shop Batch Flow Mass Production (HVM) Operator Paced Machine Paced Continuous Flow Three General Categories of Production Systems Center for Lean Systems and Management Department of Industrial Engineering

16. Properties of the Production Systems Source: Manufacturing Strategy by Miltonburg, Productivity Press Center for Lean Systems and Management Department of Industrial Engineering

17. Cell Designs Source: Reorganizing the Factory by Hyer and Wemmerlov Center for Lean Systems and Management Department of Industrial Engineering

18. Flexibility in U-Shape Cells Source: Improving Production with Lean Thinking by Santos, Wysk, and Torres (John Wiley and Sons) Center for Lean Systems and Management Department of Industrial Engineering

19. Pre-requisites for Cell Layout • Multifunctional workers • Improvement of set-up time (especially for dies) • Looking for simple method for production automation Center for Lean Systems and Management Department of Industrial Engineering

20. Methodology for Production Cell Layout • Form Product Families • Re-layout the work flow • Plan and control the cell Center for Lean Systems and Management Department of Industrial Engineering

21. Grouping of Products • Group Technology – process of identifying commonality of processes among products • The objective is to identify product families based on similar processes. • This grouping of products helps reorganize processes into cells. Center for Lean Systems and Management Department of Industrial Engineering

22. Example of Group Technology Analysis Lean for Dummies by Natalie Sayer and Bruce Williams Center for Lean Systems and Management Department of Industrial Engineering

23. Cell Design Performances Center for Lean Systems and Management Department of Industrial Engineering

24. Average Min Max Improvement on Completed Output 521% 250% 900% Improvement in Accepted Quality Output 533% 256% 860% Reduction in Cycle Time (time between deliveries, min) 46% 23% 67% Reduction in Leadtime per order (average min) 31% 17% 50% Simulation Results from Lean Trainings Lean Trainings were conducted across different regions using real manufacturing scenarios involving low volume with high variety situation. Center for Lean Systems and Management Department of Industrial Engineering

25. Cell Operations as a Manufacturing Advantage • Restructuring Operations into cells can help streamline operations, whether in manufacturing or services • Cells have been proven to deliver in shortening lead times, improving quality, and lowering total cost • Cellular manufacturing is an effective strategy to gain competitive advantage against competitors through better manufacturing performance. Center for Lean Systems and Management Department of Industrial Engineering

26. http://leancenter.dlsu.edu.ph Center for Lean Systems and Management Department of Industrial Engineering