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SCM 300 Module 3

New Product Development (NPD)

  • NPD is a cross-functional endeavor that integrates expertise, resources and strategic insight from multiple corporate functions:

    • Designers – conceive product aesthetics, ergonomics, functionality.

    • Engineers – translate concepts into manufacturable specifications; select materials, tolerances, processes.

    • Supply-Chain – plan parts sourcing, labor, assembly-line tooling, logistics.

    • Finance – raise/acquire capital; forecast \text{ROI}; manage cash-flow across project milestones.

    • Marketing – research consumer needs, size the market, analyze competition, position the product.

  • Holistic view is critical: decisions in one area (e.g., design complexity) reverberate through others (e.g., supply-chain cost, cycle time).

Standardization vs. Customization

  • Standardization

    • High repeatability, economies of scale, lower per-unit cost.

    • Shorter lead-time; easier quality control.

    • Risk of commoditization and less customer‐specific value.

  • Customization

    • Tailored features increase perceived value and differentiation.

    • Lower volumes, higher unit costs, more complex scheduling.

    • Requires flexible processes, responsive supply base.

  • Strategic balance must align with core competencies, brand promise, and target market expectations.

Outsourcing Decisions

  • Make-versus-buy evaluation involves strategic, financial and operational lenses.

  • Key motivations: cost reduction, access to specialized skills/technology, focus on core business, capacity relief, speed-to-market.

Outsourcing Considerations (7-Point Checklist)

  1. Location – country, region, proximity to markets or resources.

  2. Infrastructure – utilities, transportation, IT, communications.

  3. Process Design & Management – maturity, quality systems, IP protection.

  4. Materials – local availability, quality consistency, sourcing risk.

  5. Services – packaging, logistics, after-sales support.

  6. Human Elements – labor skill, culture, ethics, turnover, training needs.

  7. Finance & Accounting – transaction costs, currency risk, tax treaties.

  • Ethical implication: ensure fair labor practices, environmental responsibility, supplier diversity.

Facility Location Decisions

  • A long-term, high-capital choice that locks in cost and service structure for years.

Location Considerations

  • Cost Drivers – parts, labor, land, utilities, taxes/tariffs, transportation, warehousing.

  • Labor Issues – workforce quality, laws, unions, wage rates, managerial style, culture, quality of life incentives.

  • Proximity – to established supplier base, distribution channels, key customers/partners.

  • Physical & Environmental – climate, geography, natural disaster exposure, infrastructure robustness.

  • Market Structure – presence of hypercompetitive clusters may boost innovation but intensify rivalry.

  • Relationship Management – government relations, community support, corporate social responsibility footprint.

Hypercompetitive Markets

  • Characterized by rapid, aggressive moves among rivals; short product life-cycles; frequent price/feature wars.

  • Location inside such clusters (e.g., Silicon Valley, Shenzhen) can accelerate learning and access to talent but magnifies pressure on cost and speed.

Manufacturing & Services Integration

  • Convergence of manufacturing and service offerings (e.g., product-as-a-service, warranty, maintenance contracts) demands synchronized design of physical goods and accompanying service processes.

Manufacturing Layout & Strategy Fundamentals

Layout Considerations

  • Financial Responsibility – meet demand, maximize sales, profit, and asset utilization.

  • 4 Resource Domains:

    • Materials – flow paths, inventory positions.

    • People – ergonomics, cross-training, staffing levels.

    • Space/Area – footprint efficiency, future expansion room.

    • Information – visibility, real-time feedback, communication.

  • Worker Safety & Security – OSHA compliance, hazard control, morale.

Core Manufacturing Strategies

  1. Line Flow Strategy

    • Demand: high volume, standard items, stable industry.

    • Layout: product-focused (assembly lines, continuous flow).

    • Fulfillment: Make-to-Stock (MTS).

  2. Flexible Flow Strategy

    • Demand: low volume, high customization, volatile industry.

    • Layout: process-focused job shops.

    • Fulfillment: Make-to-Order (MTO).

  3. Hybrid Strategy

    • Demand: moderate variety/volume; mixed stability.

    • Layout: cellular/Group Technology, sometimes Assemble-to-Order (ATO).

Exemplars

  • Line Flow – Automotive assembly (slide with Mid-sized 6-cyl vs. Compact 4-cyl line).

  • Continuous Flow – Refinery, Hershey’s Kisses/Oreos; must run to completion, shutdowns expensive.

  • Flexible Flow – Custom furniture manufacturer with numerous specialty centers (Fabric, Wood, Dying, Lathe, etc.).

  • Hybrid Flow – Dell PC plant: Processor (P), Hard Drive (H), Monitor (M), Drives (D), Package & Deliver (PD).

Materials-Handling Devices & Shapes

  • Lines can be S, U, L shaped to minimize travel, enable cross-training, or fit building constraints.

Bottlenecks, Capacity & Constraints

  • System throughput is limited by the slowest operation (Theory of Constraints).

  • Simple plumbing analogy: 4 gpm → 1 gpm → 3 gpm → 2 gpm illustrates that a 1 gpm step caps output despite upstream capability.

Line Balancing – Key Concepts & Formulas

  • Goal: match production rate to demand while maximizing resource utilization and planning for future scalability/fatigue.

Key Terms

  • Cycle Time c – max time allowed at each station; also inverse of output rate.

  • Total Task Time t – sum of elemental task durations for one unit.

  • Theoretical Minimum Workstations TM = \left\lceil \frac{t}{c} \right\rceil.

  • Actual Number of Workstations n – may exceed TM due to practical limits.

  • Idle Time = [n \cdot c] - t.

  • Efficiency E = \frac{t}{n \cdot c}.

Precedence Relationships

  • Example (chair manufacture):

    • A – Prepare materials (50s)

    • B – Cushion prep (30s)

    • C – Sand wood (20s)

    • D – Attach legs/seat (45s)

    • E – Assemble back (20s)

    • F – Final lower assembly (25s)

    • G – Upper assembly (10s)

    • H – Cushion assembly (35s)

  • Demand: 400 chairs/8 hrs ⇒ c = \frac{8\,\text{hrs} \times 3600}{400} = 72\;\text{s/unit}.

  • t = 235\;\text{s} ⇒ TM = 4.

Balancing Rules (Heuristic)

  1. Identify candidates (no predecessors or predecessors already assigned).

  2. Select candidate (largest, smallest, most followers, or freestyle).

  3. Check fit within remaining station time; if not, start new station.

  4. Always respect:

    • Cycle-Time Rule ((\text{Work}_{WS} \leq c)).

    • Precedence Rule (no drying before washing).

Attempts & Metrics

  • Attempt #1, #2, #3 demonstrate that redistributing tasks changes idle time and Effective Cycle Time (the longest real station time).

  • Example: Balanced Line #2 stations’ actual loads 70-50-55-60 s ⇒ Effective c_{eff}=70\,s ⇒ capacity = \frac{28,800}{70}=411\,units vs. baseline 400.

Capacity vs. Cycle Time Translation

  • Available time in 8 hrs: 28,800\,s.

  • c=72\,s ⇒ 400 units.

  • c=70\,s ⇒ 411 units (2.75% ↑).

  • c=65\,s ⇒ 443 units (10.75% ↑).

  • Exam tip: use \text{Percent Change} = \frac{\text{New Cap} - \text{Old Cap}}{\text{Old Cap}} \times 100\%.

Decimal Indicator Insight

  • TM=3.98 (large decimal) means tight fit; balancing may force 4 stations with very low slack (example slide 35).

  • TM=3.33 (smaller decimal) suggests easier distribution (slide 36) but still requires precedence compliance (slide 37 shows failure when tasks are uneven).

Trade-offs in Line Balancing

  • More Workstations (less efficient)

    • + Lower effective cycle time, easier to ramp up.

    • − More labor cost, more idle time.

  • Fewer Workstations (more efficient)

    • + Lower wages, less slack.

    • − Higher effective cycle time, harder to speed up.

Ethical, Philosophical & Practical Implications

  • Outsourcing & location choices affect communities, labor rights, environment; must align with corporate ethics and ESG goals.

  • Hypercompetition demands agility but can drive a race to the bottom if not tempered by sustainable practices.

  • Balancing human fatigue vs. efficiency underpins the moral responsibility to design humane workstations.

Connections & Real-World Relevance

  • Lean Manufacturing (Just-in-Time) leverages line balancing to cut WIP and improve flow.

  • Industry 4.0 (IoT, real-time data) enhances visibility into bottlenecks, enabling dynamic rebalancing.

  • Service businesses (e.g., call centers) mirror line-balancing logic with agent scheduling and talk-time quotas.