Topic 10

Production strategy - What is Just-in-Time (JIT) manufacturing?

• No storage of components or completed items—produced only when needed

• No large storage areas required

• No overproduction—only ordered items are made

• Advantages: Reduced storage costs, high efficiency, no stock control, less waste

• Disadvantages: Risk of delays, high initial investment, small distribution delays

Production strategy - What is Just-in-Case (JIC) manufacturing?

• Produces and stores stock in advance for future orders

• Ensures availability for rush orders or long production items

• Advantages: No distribution delays, reliable stock, adapts to market demand

• Disadvantages: High storage costs, less efficient, potential waste from obsolete stock

Production strategy - JIT vs. JIC – Key Differences

• Storage: JIT requires no storage; JIC stores extra stock

• Efficiency: JIT is highly flexible; JIC is structured but less efficient

• Waste: JIT minimizes waste; JIC risks waste from overproduction

• Reliability: JIT can face delays; JIC has stock ready for immediate use.

What is lean production and its key characteristics?

• Lean production is an ongoing, long-term strategy focused on continuous improvement, rather than a one-off task. It is about constantly refining both products and processes to reduce waste and improve efficiency over time.

• Key characteristics of lean production include:

  • JIT system (Just in Time): Supplies and components are delivered exactly when needed, minimizing excess inventory and reducing storage costs.

  • Multi-skilled workforce: Employees are highly trained in various tasks, allowing for flexibility in the production process and better problem-solving.

  • Quality control & continuous improvement: Emphasis on ongoing efforts to maintain high-quality standards and enhance processes.

  • Zero defects & zero inventory: The goal is to produce products without defects and without unnecessary stockpiling of inventory, reducing waste and storage costs.

What are the ten principles of lean production?

• The ten principles guide lean production, ensuring efficiency, quality, and continuous improvement. If any principle is neglected, the whole system can lose its effectiveness.

• Key principles include:

  • Eliminate waste: Focus on minimizing waste in all forms, from unnecessary production to inefficient processes (JIT helps here).

  • Minimize inventory: Excess inventory leads to high storage costs and can cause inefficiencies. Lean production keeps inventory to the minimum necessary to meet customer demand.

  • Maximize production flow: Streamline production to avoid bottlenecks and delays, ensuring the smooth flow of materials and products.

  • Kaizen (Continuous Improvement): Everyone in the organization, from management to workers, is encouraged to continuously suggest improvements to processes.

  • Respect for workers: Workers are valued for their input and expertise in identifying areas for improvement. Empowering employees leads to greater job satisfaction and engagement.

  • Pull production based on customer demand: Production is driven by actual demand, rather than producing ahead of time.

  • Design for rapid changeover: Design processes and equipment that can quickly adapt to changes, reducing downtime during transitions.

  • Strong supplier partnerships: Establishing reliable relationships with suppliers helps ensure timely deliveries and consistency in quality.

  • Meet customer requirements: Focus on fulfilling customer needs with high-quality products, delivered on time.

  • Do it right the first time: Avoid rework by getting things correct from the beginning, which saves time and reduces waste.

What are the advantages and disadvantages of lean production?

Advantages of lean production:

• Cost reduction: Lean strategies reduce unnecessary spending, particularly in inventory storage and waste, which leads to lower operational costs.

• Increased productivity: By streamlining processes, removing waste, and empowering workers, production becomes more efficient.

• Improved quality: Continuous improvement efforts lead to higher product quality, reducing defects and customer complaints.

• Waste reduction: Lean production minimizes excess production, waiting times, and unnecessary transportation, resulting in less waste.

• Adaptability: Lean systems are flexible, allowing companies to quickly respond to changes in market demand, like shifting customer preferences.

• Competitive advantage: With better efficiency and quality, companies gain a competitive edge in the marketplace.

• Better employee morale: Lean methods often involve worker empowerment and improved working conditions, boosting employee satisfaction and loyalty.

Disadvantages of lean production:

• Difficult to change management and worker attitudes: Transitioning to lean production requires buy-in from all employees, and the change can be met with resistance.

• Delivery delays: Since lean systems operate with minimal inventory, any disruption in production or supply chain can lead to significant delays.

• Supply chain vulnerabilities: Relying on just-in-time deliveries means the system is vulnerable to supplier issues or transportation delays.

• High initial capital costs: Implementing lean production often requires a significant investment in new equipment, employee training, and system changes.

7 Wastes: The seven types of waste identified in lean production

• Overproduction: Producing more than needed, leading to excess inventory.

• Waiting: Time wasted when production is delayed due to waiting for materials or equipment.

• Transporting: Unnecessary movement of materials or products, adding no value.

• Inappropriate processing: Using more resources than necessary to complete a task.

• Unnecessary inventory: Storing more goods than required, which ties up resources and increases costs.

• Excess motion: Unnecessary movement by workers, such as walking or reaching for tools.

• Defects: Products or components that need to be reworked or discarded due to defects.

What are the key tools in lean production, and how do they help optimize processes?

• Value Stream Mapping (VSM): A tool used to analyze and visualize the flow of materials and information throughout the production process. It helps identify value-added and non-value-added activities, allowing businesses to target inefficiencies.

• Workflow Analysis: Involves examining how tasks and materials flow through the production process, identifying areas for improvement in efficiency. It is focused on optimizing each step of the process to ensure smoother operations.

• Kaizen: A philosophy of continuous, incremental improvement. In lean production, Kaizen encourages all employees, from top management to workers, to suggest small but impactful changes that enhance processes.

• Lead Time: The total time it takes to fulfill a customer order, from order placement to delivery. Reducing lead time is a primary goal in lean production, as it improves customer satisfaction and operational efficiency.

• 5S

Tool for lean production - The 5S Method:

• Sorting: Removing unnecessary items from the workspace to reduce clutter and improve efficiency.

• Stabilizing: Organizing tools and materials in a way that makes them easy to find and use.

• Shining: Maintaining cleanliness to ensure equipment and workspaces are functioning properly.

• Standardizing: Creating standard procedures to ensure consistency and efficiency in every task.

• Sustaining: Maintaining and regularly improving the 5S practices to ensure they become embedded in the culture.

What is Computer Integrated Manufacturing (CIM) and its role in production?

CIM refers to a manufacturing system that integrates computer technology into all aspects of the production process, from design to distribution. This integration aims to make manufacturing processes more efficient and streamlined, reducing errors and improving productivity.

• Key elements of CIM include:

  • Design (CAD): Computer-aided design (CAD) software is used to create product designs, test prototypes, and generate necessary production data, such as G-Code.

  • Planning: Computer systems help plan the production process, ensuring that the most efficient methods are used to produce the design.

  • Purchasing: CIM systems use data from the design and planning stages to automate material purchasing, often implementing a JIT (Just-in-Time) system to minimize inventory.

  • Cost Accounting: The system helps track production costs, budgets, and receipts, contributing to more accurate financial planning.

  • Inventory Control: CIM tracks materials and products in real time, ensuring materials are used efficiently and inventory levels are kept optimal, often using JIT principles.

  • Distribution: The system helps manage the distribution of products to warehouses or vendors, streamlining the logistics of production.

What are the main advantages and disadvantages of CIM in relation to different production systems?

CIM is best suited for large-scale production due to its high setup cost and automation. It is ideal for batch, volume, or mass production where efficiency and consistency are crucial.

• Advantages for different scales of production:

  • Batch, Volume, or Mass Production:

    • High automation reduces errors and waste

    • System continuously monitored, improving machine utilization

    • Productivity and quality control improvements

    • Greater consistency in output, leading to cheaper products and fewer defects

    • Ability to easily introduce new parts, reducing lead time and labor costs

    • Higher quality of finish and greater machine reliability

  • Mass Customization:

    • Customers can personalize their product choices

    • Flexibility in design, allowing for cheaper and quicker production

    • Improved quality with reduced lead time

• Disadvantages:

  • High initial setup costs: Investment in technology, robotics, and training is expensive

  • Training costs: Employees must be trained to operate complex systems

  • Job losses: Automation can lead to reduced workforce requirements

  • Lack of individuality: Automated systems are designed for efficiency, which may limit customization in certain cases

What are the advantages and disadvantages of CIM in relation to initial investment and maintenance?

Advantages:

• Constant monitoring: CIM systems are continuously monitored, making it easier to identify breakdowns and their location, which reduces downtime and maintenance costs.

• Reduced maintenance costs: CIM's automated nature ensures that fewer errors occur, resulting in less wear and tear on equipment and reducing the need for repairs.

• Increased profitability over time: While the initial investment is high, once the system is in place, CIM leads to greater efficiency, higher production rates, and lower per-unit costs, resulting in higher profits.

Disadvantages:

• High initial capital costs: Setting up a CIM system requires significant investment in hardware (computers, robots, sensors) and software, as well as employee training.

• Complex maintenance: Maintenance of CIM systems requires specialized, skilled personnel, which can increase costs and create a dependency on highly trained technicians.

• Initial setup can be time-consuming: The time required to set up and fully integrate CIM systems can be lengthy and disruptive to ongoing production.

How does CIM affect production efficiency and workforce requirements?

CIM increases production efficiency by automating many processes, reducing errors, and improving quality control. This results in:

• Improved machine utilization: Systems are constantly monitored, ensuring that machines are always operating at their optimal efficiency.

• Fewer errors and less waste: Automation reduces human error, improving product quality and consistency.

• Less labor required: Automation reduces the number of workers needed on the production line, which can lead to job losses. However, this also means that labor costs are significantly reduced over time.

• More skilled workforce needed: Although CIM reduces the number of manual laborers, it increases the need for highly skilled workers to manage, maintain, and troubleshoot the automated systems.

What are the key elements of Quality Management (QC, SPC, and QA)?

• Quality Management ensures consistency and efficiency in product development by focusing on quality control (QC), statistical process control (SPC), and quality assurance (QA).

  • Quality Control (QC): Focuses on product quality. It defines tolerances during the design stage and ensures parts meet those standards. Continuous monitoring adjusts process inputs like speed, temperature, and pressure to maintain quality. Workers are responsible for their work quality, and any out-of-tolerance products are reworked or scrapped.

  • Statistical Process Control (SPC): Uses statistical methods to monitor and control production processes. By measuring component attributes during production, SPC ensures that processes remain efficient and defects are minimized.

  • Quality Assurance (QA): Covers the entire production system, from design to documentation. QA ensures that raw materials, assemblies, products, and services meet required standards through proactive system management. QA aims to prevent defects, while QC reacts to find and fix defects.

What is the difference between Quality Control (QC), Quality Assurance (QA), and Statistical Process Control (SPC)?

• Quality Control (QC):

  • Product-oriented: Focuses on ensuring the end product meets specifications.

  • Reactive: Detects and corrects defects after they occur.

  • Involves monitoring machine performance and adjusting process inputs to maintain product quality.

• Quality Assurance (QA):

  • Process-oriented: Ensures the entire system (from design to final product) maintains consistent quality.

  • Proactive: Prevents defects by managing the processes involved in design, production, and inspection.

• Statistical Process Control (SPC):

  • Uses statistical tools to measure the performance of processes in real-time.

  • Ensures that production processes stay within set limits to minimize waste and maintain efficiency.

How do QC, SPC, and QA work together to ensure product quality?

• Together, QC, SPC, and QA ensure that products meet quality standards and reduce waste throughout production:

  • QC detects and corrects issues in the finished product. It ensures individual parts and products meet design specifications.

  • SPC monitors the process during production, using data to identify deviations early and adjust processes to prevent defects.

  • QA establishes a comprehensive quality system that ensures the quality of raw materials, production, and finished goods by maintaining consistent, high-quality processes at every stage. This prevents defects before they occur, while QC and SPC focus on identifying and correcting issues in the production process.

What is economic viability in product design?

• Economic viability refers to the ability of a product to be designed and manufactured at a cost that allows it to be affordable while still providing a financial return.

• Designers must consider:

  • Material costs

  • Manufacturing processes

  • Scale of production

  • Labor costs

• The goal is to design products efficiently to minimize costs, ensuring the product is both profitable for the company and attractive to consumers.

What is cost-effectiveness and how does it impact product design?

• Cost-effectiveness refers to the most efficient way of designing and producing a product, focusing on minimizing costs from the manufacturer’s perspective.

• It includes:

  • Capital costs (e.g., machinery, factory setup)

  • R&D

  • Marketing

  • Energy

  • Overheads (taxes, storage, etc.)

• The goal is to reduce unnecessary costs while maintaining quality, ensuring the product can be produced at a competitive price and still yield a profit.

What is the difference between costing and pricing?

• Costing: The total value of resources used to produce something, including materials, labor, overhead, etc.

  • Example: Materials cost, Labor cost, Utilities used in production.

• Pricing: The selling price a company sets for a product, which determines how much revenue they will generate.

  • Pricing is based on costs, market demand, competitor prices, and other factors to ensure profitability.

What are fixed and variable costs, and how do they contribute to total costs?

• Fixed Costs: Costs that do not change regardless of the level of production.

  • Example: Machinery costs, R&D, Marketing.

• Variable Costs: Costs that fluctuate depending on the volume of production.

  • Example: Materials (raw and processed), Utilities (electricity, water), Labor.

• Total cost = Fixed Costs + Variable Costs.

What is cost analysis, and how does it help in product design?

• Cost analysis helps assess the financial feasibility of producing a product by considering potential risks and gains.

• It includes:

  • Break-even analysis to determine how many sales are needed to cover costs.

  • Scenario modeling to evaluate different production and pricing strategies.

• Cost analysis helps identify profitable pricing strategies and optimize production methods to maximize profits.

What is the break-even point (BEP), and why is it important?

• The break-even point (BEP) is the level of sales at which a company covers all its fixed and variable costs, but makes no profit.

  • BEP = Total Costs / Selling Price per Unit.

• Knowing the BEP helps businesses understand how many units they need to sell before making a profit, guiding pricing and sales strategies.

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What are pricing strategies, and how do they influence product pricing?

• Pricing strategies help determine the selling price of a product based on factors like production cost, competition, and market demand.

  • Price-minus pricing: Market demand sets the selling price before manufacturing.

  • Retail price: The recommended selling price suggested to retailers.

  • Wholesale price: The price at which products are sold to wholesalers.

  • Target cost: The desired final cost is determined before production based on competitive pricing.

How is Return on Investment (ROI) calculated, and what does it indicate?

• Return on Investment (ROI) measures the profitability of an investment.

  • ROI = (Profit / Investment Cost) × 100.

• A higher ROI indicates better returns on the money invested in a product or service, guiding businesses on whether their investments are financially worthwhile.

What is unit cost, and how is it calculated?

• Unit cost refers to the cost to produce one unit of a product.

  • It includes both fixed and variable costs.

  • Calculation:

    • Total manufacturing costs (fixed + variable) ÷ Number of units produced.

• Knowing the unit cost is essential for pricing decisions and assessing profitability.

What is financial return, and how does it relate to product sales?

• Financial return refers to the profits a company generates from its sales or investments.

  • It reflects the revenue generated after accounting for costs and expenses.

• A higher financial return indicates better product profitability, influencing pricing strategies and business decisions.