Manufacturing Flexibility

1. Manufacturing Flexibility 산업공학과 제조통합자동화 실험실 2001.4.13 금 발표: 김해중

2. Reference papers • Toward a taxonomy of manufacturing flexibility dimensions • Derrick E. D’Souza, Fredrik P. Williams • Department of Management, University of North Texas • Manufacturing Flexibility: Measures and relationships • Rodney P. Parker. • School of Business Administration, The University of Michigan • Andrew Wirth • Department of Mechanical and Manufacturing Engineering, The University of Melbourne MAI Lab

3. Contents Manufacturing Flexibility Taxonomy Flexibility Measures Relationships among Flexibilities MAI Lab

4. Toward a taxonomy of manufacturing flexibility dimensions Derrick E. D’Souza, Fredrik P. Williams Department of Management, University of North Texas, US Journal of Operation Management 18, 2000, 577-593

5. Introduction • Global competition • Cost: direct labor, direct materials, allocated overhead • Quality: characteristics • Flexibility(responsiveness): ? Objectives of study Definition of MF Construct dimensions and elements of MF Empirically-test MAI Lab

6. Definition of MF • Upton, 1994 “The ability to change or react with little penalty in time, effort, cost or performance” • Garwin, 1987 “The ability to respond effectively to changing circumstances” • Ability of manufacturing function to react to changes in its environment without significant sacrifices to firm performance MAI Lab

7. Volume Material handling Externally driven Variety Internally driven Process Elements: range & mobility Dimensions of MF • Garwin’s taxonomy • Volume: ability to change the volume of output of manufacturing process • Materials: ability to accommodate uncontrollable variations in the materials and parts being processed • Mix: ability of the system to produce many different products • Modification: ability to incorporate design changes into a specific product: • Changeover: ability to adapt to changes in the production process • Rerouting: ability to change the sequence of steps in the production process through which the product must progress • Flexibility responsiveness: ability to adjust emphasis on the flexibility dimensions given changes in envrionment MAI Lab

8. Elements and Measures • Element • Range: extent of flexibility on each dimension • Mobility: agility in making the changes on each dimesion • Criteria of Measure • Cost • Time • Profitability MAI Lab

9. Measures (1/2) • Volume flexibility • Range • The range of output volume at which the firm can run profitably • Mobility • Time required to increase or decrease: output • Cost of increasing or decreasing volume of output • Variety flexibility • Range • The number of different products produced by the manufacturing facility • The number of new products produced per year • Mobility • Time required to introduce new products • Cost of introducing new products MAI Lab

10. Measures (2/2) • Process flexibility • Range • Number of operations a machine can perform without incurring prohibitive switching time or cost • Mobility • Time required to switch from one product mix to another • Cost required to switch from on product mix to another • Material handling flexibility • Range • To link every machine with every other machine on the shop floor • To move every part for proper positioning and processing • Mobility • Inventory cost as a percentage of total production cost MAI Lab

11. Test-overview(1/6) • Objective • Confirm whether the data set behaves as theory suggests - appropriateness of the flexibility construct • Data set • 240 firms that responded to a mailed questionnaire • Selected from 1996 Directory of Texas Manufacturers • Analysis • Correlations between the items • Higher correlation among the variables within each of the two elements of a dimension • Lower correlations among variables across elements • Match between the theoretical model and data MAI Lab

12. Test-questionnaire(2/6) MAI Lab

13. Test-volume flexibility(2/6) MAI Lab

14. Test-variety flexibility(3/6) MAI Lab

15. Test-process flexibility(4/6) MAI Lab

16. Test-materials flexibility(4/6) MAI Lab

17. Conclusions • Appropriateness of taxonomy • Need of generalizable set of dimensions across industries (geographical location) • Need of developing items that provided better separation MAI Lab

18. Manufacturing flexibility: Measures and Relationships Rodney P. Parker. School of Business Administration, The University of Michigan Andrew Wirth Department of Mechanical and Manufacturing Engineering, The University of Melbourne European Journal of Operational Reacher 118, 1999, 429-449

19. Introduction • FMS • Successful technical implementation alone is not enough • FMS investment must correlate with the corporate and manufacturing strategy • Lack of full understanding of manufacturing flexibility Objectives of study framework two new measures relations among some flexibility types MAI Lab

20. Flexibility taxonomies • Browne et al., 1984 • Machine • Process • Product • Routing • Volume • Expansion • Ability to expand the capacity of the system as needed, easily and modularly • Operation • the ability to interchange the ordering of several operations for each part type • Production • the universe of part types that can be produced MAI Lab

21. Framework model • Supplement in Lack of consistency No Purposes of measures Criteriafor measures Development of measures Validated? Yes Usage MAI Lab

22. Evaluations of existing measures(1/3) • Machine flexibility • Purpose • To capture characteristics of machine • Criteria • Increase if machine can do more tasks • Increase if the efficiency for doing any one task increases • Process flexibility • Purpose • To reduce batch sizes & inventory costs • Criteria • Increase with increasingly versatile material handling system • Increase with decreasing changeover cost and time MAI Lab

23. Evaluations of existing measures(2/3) • Product flexibility • Purpose • To act as a descriptor of this aspect of manufacturing flexibility • Criteria • Increase with increasing number of parts introduced per time period • Increase with an increasing size of the universe of parts able to be produced without major setup • Product flexibility • Purpose • To capture the ability of system to absorb an event such as machine breakdown and continue to operate with minimal strain. • Criteria • Increase with increasing number of routes in system • Increase with increasing operation capability of the machines MAI Lab

24. Evaluations of existing measures(3/3) • Operation flexibility • Purpose • To raise the level of machine utilization by interchanging the sequence of operations • Criteria • Increase with increasing number of interchangeable operations whthin the part’s process plan • Increase with an increasing number of machines available to perform MAI Lab

25. New measures-Volume flexibility(1/4) • Purpose • To guard against uncertainty in demand levels • To gauge the range of profitable volumes and the limits of this range • Criteria • Increase with increasing range of profitable production volumes • Measures • Range over which the system remains profitable # of capacity units required per part produced Break-even point Maximum capacity MAI Lab

26. New measures-Volume flexibility(2/4) Sales-Variable costs-Fixed costs= Operating income # of unit unit price unit variable cost Fixed cost Break-even point Contribution margin MAI Lab

27. New measures-Volume flexibility(3/4) • Two products mix & single capacity constraint MAI Lab

28. New measures-Volume flexibility(4/4) n products Increase as F decrease Increase as Cmax increase Increase as the contribution margin MAI Lab

29. comparison New measures-Expansion flexibility(1/4) • Purpose • To permit senior management to decide between investments in a non-expansion flexible(conventional)system and an expansion flexible system in a capacity-planning context • Criteria • Comparisons between large upfront investments of conventional system and smaller incremental investments of expansion flexible capacity • The smaller the marginal investment, the greater the expansion flexibility • Measures • The magnitude of the incremental capital outlay required for providing additional capacity • Assumptions in investment alternatives • heavily in conventional equipment to cover capacity need in future • in a minimum efficient quantity of conventional capacity • In a minimum efficient quantity of expansion flexible capacity MAI Lab

30. New measures-Expansion flexibility(2/4) Assumptions in Model • Flexible option will always manufacture to demand • Conventional option will manufacture as much as demand or maximum Conventional option (EMV: Expected Monetary Values) Flexible option Probability of Di Demand(D1<D2<..<Dm) Conventional capacity Unit cost of Conventional capacity Unit cost of flexible capacity MAI Lab

31. New measures-Expansion flexibility(3/4) (Variance of the demand distributio) Proposition 1 is maximized for the discrete uniform distribution Proposition 2 EF is a monotonically increasing function of Increase as the variance, or uncertainty, of the probability demand distribution increase MAI Lab

32. New measures-Expansion flexibility(4/4) MAI Lab

33. Relationships(1/2) MAI Lab

34. Relationships(2/2) MAI Lab

35. Conclusions • Development of flexibility measures by directing the focus onto the purposes and criteria of the measure • New measures for volume and expansion flexibility • Relationships among flexibility types MAI Lab

36. Discussion • Generalized taxonomy and measures • Development of relationships among flexibility • Extend to other areas( I.e. supply chain) MAI Lab