Production Planning and Control

1. Production Planning and Control Professor JIANG Zhibin Dr. GENG Na Department of Industrial Engineering & Logistics Management Shanghai Jiao Tong University

2. Textbook Steven Hahmias, Production and Operations and d Analysis, Tsinghua University Press

3. Chapter 1 Production System and Operations Strategy Contents Basic Conception of Production & Operations Management Production System and its Classification Organization of Production System Operations Management &Operations Strategy The Classical View of Operations Strategy Strategic Initiatives-Reengineering Matching Process and Product Life Cycles Capacity Growth Planning

4. 1.1 Basic Conception of Production and Operations Management Basic task of enterprise: to gain high efficiency More product outputs With less inputs Production activities Economic and social benefits

5. The Production Activities of Enterprises 1.Decision activities; 2. Technology activities; 3. Supply activities; 4. Manufacturing activities; 5. Sales activities; 6. Financial activities; Production activities

6. The Task of Production & Operations Management • Why Production activities should be organized in right way? • Dependent mutually and connected tightly; • To achieve a company’s purpose. • The Task of Production and Operation Managements: Organizing the production activities reasonably, making good use of the resources efficiently for the purposes as follows: • Complete the product production • Achieve the business objective • Reduce cost, improve quality and reduce production time (cycle) • Promote production system’s flexibility.

7. 1.2 Production System System view • An enterprise is a large system. • A production system is a subsystem of the whole enterprise system, and its main function is to produce products • A production system uses operations resources to transforms inputs into some desired outputs.

8. Decision Decision Management Feedback Feedback Feedback Supplier Customer Decision Output End products services Input Materials, Capital Demand, Information, Energy Transform Manufacturing Assembling Storing, Service Transportation Resource:People, Plants, Parts, Process, PPC Production System

9. System Primary inputs Resources Primary transforma-tion Desired outputs automobile plant steel, power parts, other materials facilities, and workers manufacturing and assembling cars with high quality wholesale center goods storage tools distribution instant delivery Example: inputs-transformation -outputs of Production system

10. Elements of Production System

11. Classification of Production System

12. Continuous Flow Production System • Continuous flow production , or called a continuous process or a continuous flow process because the materials, either dry bulk or fluids that are being processed are continuously in motion, undergoing chemical reactions or subject to mechanical or heat treatment. Continuous usually means operating 24 hours per day, seven days per week with infrequent maintenance. • Some common continuous processes are the following: • Oil refining • Chemicals • Synthetic fibers • Fertilizers • Pulp and paper • Blast furnace (iron) • Metal smelting • Power stations • Natural gas processing • Sanitary waste water treatment • Continuous casting of steel • Float glassRead more: http://www.answers.com/topic/continuous-production#ixzz1mHAXXocF

13. Continuous Flow Production System Characteristics 1. Relatively steady production process (seldom stop, keep the steady production rate); 2. High standardization of products; 4. Few product sorts; 5. Highly automated, highly specialized and expensive facility; 6. The facility failure can bring in great loss, so the equipment maintenance is very important. The key of continuous flow production system : emphasize on aggregate production planning and facility maintenance

14. Discrete Production System • Discrete production is a production process in which its output is individually countable, or identifiable by serial numbers, and is measurable in distinct units rather than by weight or volume as in Continuous flow production. The processes deployed in discrete production are not continuous in nature. Each process can be individually started or stopped and can be run at a varying production rates. • Example of discrete production: • Automobiles; • Mobile phone • Home appliances; • Computers;

15. Discrete Production System Characteristics • Discrete products (individually countable measurable in distinct units ), • Not steady production: affected by customers greatly ; • Complex products manufacturing: many parts and components; • Short product life cycle, and quickly changed products are (due to continually changing customers’ demands). • Complex production and operations management; • Most methods in IE aimed at this type of production.

16. Discrete Production System Difficulties • Different type of products needs different production process, needs different layout of equipments>Product change, layout changes • The production proportion of different type of products often changes > workforce organizing, equipments arranging , production scheduling are very difficult and needs to adjust continuously. • The requirement of production capacity is dynamic, the load-balance and the synchronizationof production process are very difficult but necessary. Annual plan for production is usually inaccurate, however, the short plans such as monthly and weekly plans are the keys.

17. Difference between Continuous Flow and Discrete Production

18. Difference in the Facility and Manufacturing Aspects

19. Discrete Production System • Discrete production systems • Mass production • Multi-products and low volume production • One of a kind production • Mass customization

20. Mass Production

21. Multi-product and Low Volume Production

22. One of a Kind Production • Every order has only one or several quantity of a kind product, • Start to organize production after receiving order. e.g. shipbuilding, airplane making, generating electricity equipment • Characteristics • many kind of products, different kind needs different production process. • general equipments are required, which need a long adjustment period with low efficiency to different product • workersare also required to be generalists. • Management emphasis: effective cooperation (manufacture, distribution, design, process and purchase) • to decide reasonable delivery date, • to improve the flexibility of manufacture system • to improve the generalization of parts.

23. Classified based on customization • Make to Stock • Characteristic: • Customer ordered products are satisfied by stocked product; • Produce to replenish the stock while it drops to given level • Production based on the forecasting • Mass production, in big batch • High product inventory • High productivity • Simple production organization • Disadvantage: • High risk of excess inventory or order of stock

24. Produce to Order

25. Produce to Order- Assembly to Order (ATO) • First produce semi-finished products (parts and components) in advance, • Then assemble them into different products according to customer order. (e.g. automobile manufacturing) • The most mature production mode, the production of parts and components are similar to make to stock with following properties: • high standardization and generalization parts or components • big production batch • high productivity • in many cases, use flow production line

26. Produce to Order- Make to Order (MTO) • All products have been designed in advance • Later, according to customer orders, buy raw materials and parts, components, and • Then manufacture and assembly them into products the customer requires. • Some raw materials and standard parts may be prepared based on the forecasting • Forecasting should be paid great attention

27. Produce to Order- Engineer to Order (ETO) • First design products according to customer’s requirement after receiving order, then purchase, and then make them. • Long production cycle • Pay more attention to reducing design cycle • Standard and general parts should be used as much as possible • Using CAD, CAPP.

28. Engineer to Order，ETO Order Delivery Make to Order，MTO Order Assembly to Order，ATO Order MTS Order design purchasemanufacture assemblydelivery Production for Order

29. Product Type and Production Batch Many MTO ATO Product type ETO MTS Few Small Large Production batch

30. Classifiedbased on industry -Service Industry Characteristics • Product is service, and it can not be stored. • Labor denseness, and low labor productivity. • The standard of quality: customer satisfaction degree. • Some service is included in the manufacture industry, e.g. sales, field support (service-after-sales) and accounting.

31. Service Industry • Types of Service Industry • Degree to which customers are touched • High-touch type：hotel, clinic, restaurant, and shop • low-touch type：accounting, warehouse management, planning and scheduling, wholesale, equipment maintenance, transportation. • Customer to serve • Production oriented service • Consumption oriented service • Service Industry Management: in many aspects, methods in manufacturing industry can be used here, e.g. • Fast food restaurant: group technology • Hospital: logistic management

32. 1.3. The Organization of Production System • A production system is usually divided into basic units, e.g. workshop, manufacturing cell, and working team, and all these units can be organized on one of the following three basic principles: • Process focused • Product focused • Group technology (GT)

33. Principle of Process focused Process focused Principle of process focused : organize the production units according to a production process kind (Turning, milling, grinding, drilling, etc). Product focused

34. Principle of Process focused Process focused • Within one production unit, the same type of workers complete the same processes using the same type equipments.e.g. • machining workshop, • lathe section, • drill section, • heat treatment workshop, • anneal section, • assembly workshop. Product focused

35. Principle of Process focused

36. Principle of Product focused Process focused • Principle of product focused: the production unit is organized according to a product kind ( or a part or a component kind) Product focused

37. Principle of Product focused • Within one production unit, one product’s production( all processes) is completed by different type workers using different type equipments • It can also be called as closed-production-unit. e.g. automobile assembling line, TV assembling line . Process focused Product focused

38. Principle of product focused • Advantages: • the material handling distance in production process can be reduced greatly • the WIP inventory can be reduced greatly. • can use productive and automatic organization mode—production line. • the cooperation among production departments can be reduced, and hence management can be simplified. • Disadvantages • low equipment utilization rate; • the whole production unit can be influenced once an equipment breakdown; • low production flexibility

39. Group Technology • Group Technology (Manufacturing cell, flexiable manufacturing system)- allocate different equipments into a production cell to work on a product family that have similar shapes and process requirements. • Within one cell, the production of a product family can be completed by different type workers using different type equipments.

40. Customer Customer Process Specialization vs.GT Manufacturing Cell Process focused Warehouse Warehouse Customer GT Cell Discontinuous Flow Line Warehouse Warehouse

41. Group Technology • Advantages • better human relations: a work team complete a whole task. • improved operator expertise: worker only make limited type parts，repetition means quick learning. • less work-in-process (WIP) inventory and material handling: a cell include several production stages, like a production line. • Faster production setup: similar products, fewer tool changes, so fewer setup. • GT production cell overcomes some disadvantages of process focused production system.

42. 1.4 Operations Management &Operation Strategy Operations Management • To design, operate, assess and improve production system. • The core of Operations Management is the management of production systems-production planning & control (PPC)

43. 1.4. Operation Management &Operation Strategy

44. 1.4. Operation Management &Operation Strategy • Business Strategy is concerned with setting broad policies and plans for using production resources of a firm to best support its long-term competitive goals. • It defines • The market where the enterprise compete; • The level of investment; • The measures of allocating resources to and integrating separate business; • Functional area strategies for different departments, including • The marketing strategy; • The financial strategy; • The operational strategy;

45. 1.4. Operation Management &Operation Strategy • Operation Strategy • The means by which a firm configures its resources to achieve its competitive goals; • For manufacturing firms, it involves all decisions concerning the production, storage, and distribution of goods; • Key operational decisions include • Where to locate new manufacturing facilities; • How large these facilities should be; • What processes to use for manufacturing and moving goods through the system; and • What workers to employ.

46. 1.4. Operation Management &Operation Strategy • Operation Strategy • Service firms also require an operation strategy • Disney theme park’s continuing record of success is partly due to its careful attentions to detail in every phases of its operations. • It has hundreds IE engineers in all theme parks over the world. • Establishing operating hours and monthly sales goals; optimizing bus routes for 250K daily guest trips; implementing meter-based maintenance scheduling for ride vehicles; and building queuing and simulation models for call centers, theme park rides, and resort front desks.

47. 1.4. Operation Management &Operation Strategy • American companies’ lesson: OM is important • Years ago, the American big three (General Motor, Ford Motor Co., and Chrysler Group) placed too much emphasis on marketing and finance (leveraged buyouts, mergers, and stock prices) and too little on operations (making and delivering the products) ; • The enormous success of Japanese auto makers motivated the American big three to close their inefficient plants and change the way things are done; • Today, the best American auto makers compete their Japanese counterpart s by quality and efficiency.

48. 1.4. Operation Management &Operation Strategy-Framework • Two Traditional Strategic Dimensions- • Lower Cost • New entrants to a market operate on low cost strategy; • Examples: • Korean automakers: Hyundai and Daewoo; • Discount outlets: Costco; • Retailers: Wal-Mart; • May be successful over short term, but risky in long run-low cost; • Customers will finally abandon products that are in poor quality regardless of low cost; (Made in China!) • Many manufacturers of low-cost PC clones poplar in 1980s are long gone.

49. 1.4. Operation Management &Operation Strategy • Two Traditional Strategic Dimensions • Product Differentiation-Differentiate a company’s products from its competitors’. • Providing uniqueness to buyers : BMW--high performance, well made cars at even high price ; • Product differentiation within a firm to capture different market segments • GM-a successful case: successfully captured different market segments at the same time by forming five different distinct divisions. • Henry Ford as opposite case: Insisted on providing only a single models, which almost led the company to bankrupt many years ago.

50. Means different things in different contexts; • Product Functions-if the function can be performed as designed. • Reliability relevance - • Product Design-if the design is satisfactory; • Service level; • Quality of product • Statistical aspects of products; • Everyone competes on quality; 1.4. Operation Management &Operation Strategy • Other Strategic Dimensions • Quality; • Delivery speed; • Delivery reliability; • Flexibility;