ib design and tech - topic 10
(10.1) - JIT AND JIC
CONCEPTS & PRINCIPLES
Just in Time (JIT) and Just in Case (JIC) are strategies for managing production.
They focus on managing the raw materials and parts needed for production and inventory
The goal is the reduction of storage costs, while ensuring there is enough inventory to meet customer demand
Manufacturers will select a strategy based on factors such as:
the type of product being manufactured
the state of the economy
the market
JUST IN CASE (Push to the market)
focuses on creating products in anticipation of market demand
Their goal is to reduce costs by taking advantage of economies of scale
The story of complements or products are stored as inventory.
For products that takes a long time to produce, having an inventory on hand reduces the waiting time for customers
ADVANTAGES DISADVANTAGES | |
Timely distribution of parts is always reliable | Large inventory must be managed |
Higher reliability as parts in inventory are ready to be sent | Higher capital costs for space to store inventory |
Buffer of items in stock in case there is a production delay, quality control or sudden increase in demand | Higher wastage due to spoilage (products going bad or expiring such as food or some chemicals) |
Ability to respond to market demand as the manufacturer can always meet need | Risk of changing market demand could mean the manufacturer is left with large quantities of unsalable goods |
Lower capital cost as less dependency on complex ICT systems (compared to JIT) |
JUST IN TIME (Market Pull)
manufacturers respond to market needs as the need arises
in this model, goods are made to order when requested
doesn’t carry a large inventory of goods or raw materials
relies on a network of suppliers and distributors to move raw materials in and product out of the factory
this approach depends on digital communication system and IT infrastructure to coordinate between all parties
ADVANTAGES DISADVANTAGES | |
Highly flexible manufacturing ideal for short runs | Greater risk of manufacturing delays - production and quality control issues in one area can delay the whole system |
Low waste as there is no over-production, little idle time and material uses is optimised | Delay between ordering and delivery - customers must wait longer (compared to JIC) to receive item |
Lower costs as there is little to no inventory to manage - raw materials are used almost immediately and products are shipped very soon after manufacture | Manufacturers cannot benefit from economies of scale to the same degree because they purchase smaller quantities of raw materials |
(10.2) - LEAN PRODUCTION
lean production - aims to eliminate waste and maximise the value of a product based on the perspective of the consumer
Advantages
increased productivity - due to focus on kaizen and waste reduction
increased quality - focus on improvement and reduction of defects
cost reduction - cause the manufacturer is able to pass on cost savings to the customer
increased profits - through cost reduction + increased customer satisfaction
improved working conditions for employees
competitive advantage - cause of focus on cost reduction + productivity
reduced environment impact - due to reduction of waste of materials
Disadvantages
high initial costs - need to invest in JIT + JIC systems and IT systems
difficult to introduce to an existing workforce - as change can be scary for some people
dependent on a highly integrated system - if there’s a breakdown in communication, deliveries or production, the whole manufacturing system can come to a halt
no inventory can make it difficult to respond to sudden increases in demand
Characteristics of Lean Production
JIT Supplies/Systems
the correct amount of material and parts delivered at the right time to eliminate inventory
Highly trained, multi-skilled workforce
using experts in production engineering and to ensure no time and materials are wasted
Zero inventory
manufactured product are shipped immediately, avoiding the need for managing inventory
Zero defects
avoid defects by ensuring that no substandard materials and production practices are used
Quality control and continuous improvement
an active approach to improvement; Quality control and checks happen at all stages of the production
Principles of Lean Production
Minimising inventory to reduce inventory management costs
Elimination of all waste - time, material, reduction of errors and defects
Designing for rapid production changeover to allow for efficient retooling and changes in production goals
Pulling production from customers demand, a JIT systems is used to drive production rather than a JIC systems
Partnering with suppliers to operate a successful and efficient JIT system
Doing it right first time - empahises quality and reduces waste
Maximising production flow to take advantage of economies of scale
Empowering workers as they are the most valuable resource in the company
Focus on Kaizen
Meeting customer requirements - taking every single customer complaint and opinion of products or services seriously; the flexibility of the lean production system determines the degree to which a company can meet each individual customer’s needs
Value Stream Mapping
Concerned with the big picture of the production process.
the goal is to identify areas for improvement, optimising the overall process
Its a lean production management tool used to analyse current and future processes to produce a product through to delivery to the consumer
Workflow Analysis
Concerned with the details of the production line
it considers the sequence, tools and even worker movements to ensure the highest possible efficiency in the system
Kaizen
A philosophy of continual improvement
it’s played a significant role in the success of many Japanese companies - most notably Toyota
Emphasises the workforce as the most valuable component of a manufacturing system.
This is founded on the belief that no system is perfect, and those in the system (workers) are best placed to suggest improvements
Training a skilled workforce develops an intimate understanding of the production process and empowers workers to identify areas for improvement
such an approach empowers employees across all levels, such systems are more horizontal than hierarchical
The 5 S’s
A method for organising the workplace with the goal of improving efficiency of production
The 7 Wastes in Lean Manufacturing
^identifies the areas of waste, negatively affecting a lean production system
(10.1) - JIT AND JIC
CONCEPTS & PRINCIPLES
Just in Time (JIT) and Just in Case (JIC) are strategies for managing production.
They focus on managing the raw materials and parts needed for production and inventory
The goal is the reduction of storage costs, while ensuring there is enough inventory to meet customer demand
Manufacturers will select a strategy based on factors such as:
the type of product being manufactured
the state of the economy
the market
JUST IN CASE (Push to the market)
focuses on creating products in anticipation of market demand
Their goal is to reduce costs by taking advantage of economies of scale
The story of complements or products are stored as inventory.
For products that takes a long time to produce, having an inventory on hand reduces the waiting time for customers
ADVANTAGES DISADVANTAGES | |
Timely distribution of parts is always reliable | Large inventory must be managed |
Higher reliability as parts in inventory are ready to be sent | Higher capital costs for space to store inventory |
Buffer of items in stock in case there is a production delay, quality control or sudden increase in demand | Higher wastage due to spoilage (products going bad or expiring such as food or some chemicals) |
Ability to respond to market demand as the manufacturer can always meet need | Risk of changing market demand could mean the manufacturer is left with large quantities of unsalable goods |
Lower capital cost as less dependency on complex ICT systems (compared to JIT) |
JUST IN TIME (Market Pull)
manufacturers respond to market needs as the need arises
in this model, goods are made to order when requested
doesn’t carry a large inventory of goods or raw materials
relies on a network of suppliers and distributors to move raw materials in and product out of the factory
this approach depends on digital communication system and IT infrastructure to coordinate between all parties
ADVANTAGES DISADVANTAGES | |
Highly flexible manufacturing ideal for short runs | Greater risk of manufacturing delays - production and quality control issues in one area can delay the whole system |
Low waste as there is no over-production, little idle time and material uses is optimised | Delay between ordering and delivery - customers must wait longer (compared to JIC) to receive item |
Lower costs as there is little to no inventory to manage - raw materials are used almost immediately and products are shipped very soon after manufacture | Manufacturers cannot benefit from economies of scale to the same degree because they purchase smaller quantities of raw materials |
(10.2) - LEAN PRODUCTION
lean production - aims to eliminate waste and maximise the value of a product based on the perspective of the consumer
Advantages
increased productivity - due to focus on kaizen and waste reduction
increased quality - focus on improvement and reduction of defects
cost reduction - cause the manufacturer is able to pass on cost savings to the customer
increased profits - through cost reduction + increased customer satisfaction
improved working conditions for employees
competitive advantage - cause of focus on cost reduction + productivity
reduced environment impact - due to reduction of waste of materials
Disadvantages
high initial costs - need to invest in JIT + JIC systems and IT systems
difficult to introduce to an existing workforce - as change can be scary for some people
dependent on a highly integrated system - if there’s a breakdown in communication, deliveries or production, the whole manufacturing system can come to a halt
no inventory can make it difficult to respond to sudden increases in demand
Characteristics of Lean Production
JIT Supplies/Systems
the correct amount of material and parts delivered at the right time to eliminate inventory
Highly trained, multi-skilled workforce
using experts in production engineering and to ensure no time and materials are wasted
Zero inventory
manufactured product are shipped immediately, avoiding the need for managing inventory
Zero defects
avoid defects by ensuring that no substandard materials and production practices are used
Quality control and continuous improvement
an active approach to improvement; Quality control and checks happen at all stages of the production
Principles of Lean Production
Minimising inventory to reduce inventory management costs
Elimination of all waste - time, material, reduction of errors and defects
Designing for rapid production changeover to allow for efficient retooling and changes in production goals
Pulling production from customers demand, a JIT systems is used to drive production rather than a JIC systems
Partnering with suppliers to operate a successful and efficient JIT system
Doing it right first time - empahises quality and reduces waste
Maximising production flow to take advantage of economies of scale
Empowering workers as they are the most valuable resource in the company
Focus on Kaizen
Meeting customer requirements - taking every single customer complaint and opinion of products or services seriously; the flexibility of the lean production system determines the degree to which a company can meet each individual customer’s needs
Value Stream Mapping
Concerned with the big picture of the production process.
the goal is to identify areas for improvement, optimising the overall process
Its a lean production management tool used to analyse current and future processes to produce a product through to delivery to the consumer
Workflow Analysis
Concerned with the details of the production line
it considers the sequence, tools and even worker movements to ensure the highest possible efficiency in the system
Kaizen
A philosophy of continual improvement
it’s played a significant role in the success of many Japanese companies - most notably Toyota
Emphasises the workforce as the most valuable component of a manufacturing system.
This is founded on the belief that no system is perfect, and those in the system (workers) are best placed to suggest improvements
Training a skilled workforce develops an intimate understanding of the production process and empowers workers to identify areas for improvement
such an approach empowers employees across all levels, such systems are more horizontal than hierarchical
The 5 S’s
A method for organising the workplace with the goal of improving efficiency of production
The 7 Wastes in Lean Manufacturing
^identifies the areas of waste, negatively affecting a lean production system
(10.3) - Computer Integrated Manufacturing
<aside> 🎀
^uses computers to automatically monitor and control the entire production of a product
</aside>
CIM integrates all aspects of production (not just manufacture) to optimise this process
ALL teams collaborate and share information with the goal of optimising production.
It’s a highly integrated computer networking system that combined JIT principles with a Lean Manufacturing approach.
Elements of CIM
Design
Use of CAD/CAM to deign, prototype and iterate a design.
CAD to stimulate parts or features and conduct FEA to generate performance data
Software can generate a Bill of Materials (BOM) and files or digital assets to manufacture parts.
Planning
Using the data provided by the Design team, the Planning team will generate a production plan that considers production costs, available processes, scheduling, etc.
Purchasing
The Purchasing team will co-ordinate buying of materials and parts to product the product.
Inventory is kept to a minimum (through JIT principles).
Inventory control software orders replacement parts and materials when they reach low levels.
Manufacturing
Manufacturing is closely connected to Purchasing and Design.
Using the digital files and assets produced by the design team, products are manufactured using CAM and automated manufacturing systems.
Use of materials and parts is closely integrated with inventory control and purchasing systems.
Cost Accounting
The Finance team uses software to manage accounts and payments, integrated with Inventory Control and Purchasing.
Cost Accounting ensures production is uninterrupted.
Inventory Control
Inventory control ensures that materials and parts are reordered in a timely manner.
Locations of materials and parts within the production process can be tracked.
Inventory control co-ordinates with warehousing and shipping to ensure inventory levels stay at an appropriate level in keeping with JIT principles.
Distribution
Distribution uses computerised systems to manage and organise the storage of raw materials, finished products, and shipping to the next phase of the chain, consumer, client etc.
These types of systems make use of bar codes, RFID chips, and increasingly AI technologies to manage and track items in the system.
CIM Systems + Scales of Manufacturing
CIM systems allow companies to operate with a global scope, while achieving economies of scale. The integrated systems streamline the whole process, from design to manufacture to distribution. The integrated monitoring of all systems, particularly manufacturing, means that errors and problems can be quickly identified and resolved.
CIM Comparison
(10.4) - Quality Management
<aside> 🎀
Key Terms:
tolerance - the allowable amount of variation within a particular quality
inspection - the checking of qualities at different stages throughout the production process
destructive - testing a product or part that destroys or physically alters the part
heat resistance, compression, toughness
non-destructive testing - testing a product or part that measures physical properties
weighing, checking colour, confirming dimensions </aside>
Quality Control
The aim of quality control is to produce the same part repeatedly with minimum or so waste
QC starts with the identification of a tolerances
Tolerances are identified at the design stage
Its necessary to know the degree of tolerance the machine that will produce that part can operate at
Different machinery operate at different tolerances. Knowing the capability of the machine and designing for this can ensure that tolerances are at an acceptable level. Quality control at the source eliminates waste from defects.
Statistical Process Control (SPC)
The goal of SPC is to reduce waste, increase productivity and discover abnormalities in a process to facilitate timely decision making
Its a statistical tool that ensures a process operates efficiently (this involves measuring aspects of a product or process to identify inefficiencies and opportunities for improvement)
Examples
Car manufacturers collecting data on types and frequency of repairs, rate of wear and tear on parts such as brake pads, and data from car accidents and crashes to improve quality and safety of the automobile.
Quality Assurance
The goal of QA is to reduce or avoid errors or defective products being delivered to the customer, from design to documentation.
It includes the regulation of the quality of raw materials, assemblies, products and components, services related to production, and management and inspection processes.
QA is designed to set standards of quality for all stages, from raw materials to product delivery. QA focuses on processes and procedures that ensure quality, they are not checks to ensure a product is within tolerance.
(10.5) - Economic Viability
<aside> 🎀
key terms:
cost - the expense of developing and producing a product and bringing it to market
price - the amount a customer pays for a product
profit margin - is the amount of money earned after all costs, taxes etc have been paid </aside>
Cost Effective
An analysis of cost associated with the materials, scale of production, distribution and marketing of a product can determine whether a product is financially viable to bring to market.
Cost effectiveness focuses on strategies that minimise the cost of producing a product.
Value for Money
Value for money is the relationship of an object or service between the value it provides and the cost to purchase it.
Ultimately, the consumer decides if the value a product provides is worth the cost to purchase.
This is subjective, not all consumers see the same value in a product.
Fixed Costs
Fixed costs are costs that do not change, regardless of the level of production.
They are time-based and include rent, salaries, insurance, warehousing etc.
fixed costs make up one part of the total cost of a product
Variable Cost
Variable costs change with the level of production
They are related to volume
these could include raw materials, energy, wages and distribution
Variable costs make up second component of the total cost of a product
Total Costs
The total cost of a product is calculated by adding together the fixed and variable costs
Cost Analysis
Cost analysis is a tool used to determine the feasibility of producing a product.
Analytical tools can be used to measure the cost of producing the product and the expected profit it can generate
Break-even Point
The Break-Even is the point of balance between profit and loss
It is the number of sales required to cover the total costs (fixed and variable).
The BEP represents the point at which sales start to generate profit
Calculating Price and Pricing Strategies
Designers need to consider the economic viability of their product.
If it is not economically viable it is unlikely to be brought it to market.
Many strategies and tools are used to calculate the product price, and these are often used alongside price setting strategies to determine the price.
(10.1) - JIT AND JIC
CONCEPTS & PRINCIPLES
Just in Time (JIT) and Just in Case (JIC) are strategies for managing production.
They focus on managing the raw materials and parts needed for production and inventory
The goal is the reduction of storage costs, while ensuring there is enough inventory to meet customer demand
Manufacturers will select a strategy based on factors such as:
the type of product being manufactured
the state of the economy
the market
JUST IN CASE (Push to the market)
focuses on creating products in anticipation of market demand
Their goal is to reduce costs by taking advantage of economies of scale
The story of complements or products are stored as inventory.
For products that takes a long time to produce, having an inventory on hand reduces the waiting time for customers
ADVANTAGES DISADVANTAGES | |
Timely distribution of parts is always reliable | Large inventory must be managed |
Higher reliability as parts in inventory are ready to be sent | Higher capital costs for space to store inventory |
Buffer of items in stock in case there is a production delay, quality control or sudden increase in demand | Higher wastage due to spoilage (products going bad or expiring such as food or some chemicals) |
Ability to respond to market demand as the manufacturer can always meet need | Risk of changing market demand could mean the manufacturer is left with large quantities of unsalable goods |
Lower capital cost as less dependency on complex ICT systems (compared to JIT) |
JUST IN TIME (Market Pull)
manufacturers respond to market needs as the need arises
in this model, goods are made to order when requested
doesn’t carry a large inventory of goods or raw materials
relies on a network of suppliers and distributors to move raw materials in and product out of the factory
this approach depends on digital communication system and IT infrastructure to coordinate between all parties
ADVANTAGES DISADVANTAGES | |
Highly flexible manufacturing ideal for short runs | Greater risk of manufacturing delays - production and quality control issues in one area can delay the whole system |
Low waste as there is no over-production, little idle time and material uses is optimised | Delay between ordering and delivery - customers must wait longer (compared to JIC) to receive item |
Lower costs as there is little to no inventory to manage - raw materials are used almost immediately and products are shipped very soon after manufacture | Manufacturers cannot benefit from economies of scale to the same degree because they purchase smaller quantities of raw materials |
(10.2) - LEAN PRODUCTION
lean production - aims to eliminate waste and maximise the value of a product based on the perspective of the consumer
Advantages
increased productivity - due to focus on kaizen and waste reduction
increased quality - focus on improvement and reduction of defects
cost reduction - cause the manufacturer is able to pass on cost savings to the customer
increased profits - through cost reduction + increased customer satisfaction
improved working conditions for employees
competitive advantage - cause of focus on cost reduction + productivity
reduced environment impact - due to reduction of waste of materials
Disadvantages
high initial costs - need to invest in JIT + JIC systems and IT systems
difficult to introduce to an existing workforce - as change can be scary for some people
dependent on a highly integrated system - if there’s a breakdown in communication, deliveries or production, the whole manufacturing system can come to a halt
no inventory can make it difficult to respond to sudden increases in demand
Characteristics of Lean Production
JIT Supplies/Systems
the correct amount of material and parts delivered at the right time to eliminate inventory
Highly trained, multi-skilled workforce
using experts in production engineering and to ensure no time and materials are wasted
Zero inventory
manufactured product are shipped immediately, avoiding the need for managing inventory
Zero defects
avoid defects by ensuring that no substandard materials and production practices are used
Quality control and continuous improvement
an active approach to improvement; Quality control and checks happen at all stages of the production
Principles of Lean Production
Minimising inventory to reduce inventory management costs
Elimination of all waste - time, material, reduction of errors and defects
Designing for rapid production changeover to allow for efficient retooling and changes in production goals
Pulling production from customers demand, a JIT systems is used to drive production rather than a JIC systems
Partnering with suppliers to operate a successful and efficient JIT system
Doing it right first time - empahises quality and reduces waste
Maximising production flow to take advantage of economies of scale
Empowering workers as they are the most valuable resource in the company
Focus on Kaizen
Meeting customer requirements - taking every single customer complaint and opinion of products or services seriously; the flexibility of the lean production system determines the degree to which a company can meet each individual customer’s needs
Value Stream Mapping
Concerned with the big picture of the production process.
the goal is to identify areas for improvement, optimising the overall process
Its a lean production management tool used to analyse current and future processes to produce a product through to delivery to the consumer
Workflow Analysis
Concerned with the details of the production line
it considers the sequence, tools and even worker movements to ensure the highest possible efficiency in the system
Kaizen
A philosophy of continual improvement
it’s played a significant role in the success of many Japanese companies - most notably Toyota
Emphasises the workforce as the most valuable component of a manufacturing system.
This is founded on the belief that no system is perfect, and those in the system (workers) are best placed to suggest improvements
Training a skilled workforce develops an intimate understanding of the production process and empowers workers to identify areas for improvement
such an approach empowers employees across all levels, such systems are more horizontal than hierarchical
The 5 S’s
A method for organising the workplace with the goal of improving efficiency of production
The 7 Wastes in Lean Manufacturing
^identifies the areas of waste, negatively affecting a lean production system
(10.3) - Computer Integrated Manufacturing
<aside> 🎀
^uses computers to automatically monitor and control the entire production of a product
</aside>
CIM integrates all aspects of production (not just manufacture) to optimise this process
ALL teams collaborate and share information with the goal of optimising production.
It’s a highly integrated computer networking system that combined JIT principles with a Lean Manufacturing approach.
Elements of CIM
Design
Use of CAD/CAM to deign, prototype and iterate a design.
CAD to stimulate parts or features and conduct FEA to generate performance data
Software can generate a Bill of Materials (BOM) and files or digital assets to manufacture parts.
Planning
Using the data provided by the Design team, the Planning team will generate a production plan that considers production costs, available processes, scheduling, etc.
Purchasing
The Purchasing team will co-ordinate buying of materials and parts to product the product.
Inventory is kept to a minimum (through JIT principles).
Inventory control software orders replacement parts and materials when they reach low levels.
Manufacturing
Manufacturing is closely connected to Purchasing and Design.
Using the digital files and assets produced by the design team, products are manufactured using CAM and automated manufacturing systems.
Use of materials and parts is closely integrated with inventory control and purchasing systems.
Cost Accounting
The Finance team uses software to manage accounts and payments, integrated with Inventory Control and Purchasing.
Cost Accounting ensures production is uninterrupted.
Inventory Control
Inventory control ensures that materials and parts are reordered in a timely manner.
Locations of materials and parts within the production process can be tracked.
Inventory control co-ordinates with warehousing and shipping to ensure inventory levels stay at an appropriate level in keeping with JIT principles.
Distribution
Distribution uses computerised systems to manage and organise the storage of raw materials, finished products, and shipping to the next phase of the chain, consumer, client etc.
These types of systems make use of bar codes, RFID chips, and increasingly AI technologies to manage and track items in the system.
CIM Systems + Scales of Manufacturing
CIM systems allow companies to operate with a global scope, while achieving economies of scale. The integrated systems streamline the whole process, from design to manufacture to distribution. The integrated monitoring of all systems, particularly manufacturing, means that errors and problems can be quickly identified and resolved.
CIM Comparison
(10.4) - Quality Management
<aside> 🎀
Key Terms:
tolerance - the allowable amount of variation within a particular quality
inspection - the checking of qualities at different stages throughout the production process
destructive - testing a product or part that destroys or physically alters the part
heat resistance, compression, toughness
non-destructive testing - testing a product or part that measures physical properties
weighing, checking colour, confirming dimensions </aside>
Quality Control
The aim of quality control is to produce the same part repeatedly with minimum or so waste
QC starts with the identification of a tolerances
Tolerances are identified at the design stage
Its necessary to know the degree of tolerance the machine that will produce that part can operate at
Different machinery operate at different tolerances. Knowing the capability of the machine and designing for this can ensure that tolerances are at an acceptable level. Quality control at the source eliminates waste from defects.
Statistical Process Control (SPC)
The goal of SPC is to reduce waste, increase productivity and discover abnormalities in a process to facilitate timely decision making
Its a statistical tool that ensures a process operates efficiently (this involves measuring aspects of a product or process to identify inefficiencies and opportunities for improvement)
Examples
Car manufacturers collecting data on types and frequency of repairs, rate of wear and tear on parts such as brake pads, and data from car accidents and crashes to improve quality and safety of the automobile.
Quality Assurance
The goal of QA is to reduce or avoid errors or defective products being delivered to the customer, from design to documentation.
It includes the regulation of the quality of raw materials, assemblies, products and components, services related to production, and management and inspection processes.
QA is designed to set standards of quality for all stages, from raw materials to product delivery. QA focuses on processes and procedures that ensure quality, they are not checks to ensure a product is within tolerance.
(10.5) - Economic Viability
<aside> 🎀
key terms:
cost - the expense of developing and producing a product and bringing it to market
price - the amount a customer pays for a product
profit margin - is the amount of money earned after all costs, taxes etc have been paid </aside>
Cost Effective
An analysis of cost associated with the materials, scale of production, distribution and marketing of a product can determine whether a product is financially viable to bring to market.
Cost effectiveness focuses on strategies that minimise the cost of producing a product.
Value for Money
Value for money is the relationship of an object or service between the value it provides and the cost to purchase it.
Ultimately, the consumer decides if the value a product provides is worth the cost to purchase.
This is subjective, not all consumers see the same value in a product.
Fixed Costs
Fixed costs are costs that do not change, regardless of the level of production.
They are time-based and include rent, salaries, insurance, warehousing etc.
fixed costs make up one part of the total cost of a product
Variable Cost
Variable costs change with the level of production
They are related to volume
these could include raw materials, energy, wages and distribution
Variable costs make up second component of the total cost of a product
Total Costs
The total cost of a product is calculated by adding together the fixed and variable costs
Cost Analysis
Cost analysis is a tool used to determine the feasibility of producing a product.
Analytical tools can be used to measure the cost of producing the product and the expected profit it can generate
Break-even Point
The Break-Even is the point of balance between profit and loss
It is the number of sales required to cover the total costs (fixed and variable).
The BEP represents the point at which sales start to generate profit
Calculating Price and Pricing Strategies
Designers need to consider the economic viability of their product.
If it is not economically viable it is unlikely to be brought it to market.
Many strategies and tools are used to calculate the product price, and these are often used alongside price setting strategies to determine the price.
(10.1) - JIT AND JIC
CONCEPTS & PRINCIPLES
Just in Time (JIT) and Just in Case (JIC) are strategies for managing production.
They focus on managing the raw materials and parts needed for production and inventory
The goal is the reduction of storage costs, while ensuring there is enough inventory to meet customer demand
Manufacturers will select a strategy based on factors such as:
the type of product being manufactured
the state of the economy
the market
JUST IN CASE (Push to the market)
focuses on creating products in anticipation of market demand
Their goal is to reduce costs by taking advantage of economies of scale
The story of complements or products are stored as inventory.
For products that takes a long time to produce, having an inventory on hand reduces the waiting time for customers
ADVANTAGES DISADVANTAGES | |
Timely distribution of parts is always reliable | Large inventory must be managed |
Higher reliability as parts in inventory are ready to be sent | Higher capital costs for space to store inventory |
Buffer of items in stock in case there is a production delay, quality control or sudden increase in demand | Higher wastage due to spoilage (products going bad or expiring such as food or some chemicals) |
Ability to respond to market demand as the manufacturer can always meet need | Risk of changing market demand could mean the manufacturer is left with large quantities of unsalable goods |
Lower capital cost as less dependency on complex ICT systems (compared to JIT) |
JUST IN TIME (Market Pull)
manufacturers respond to market needs as the need arises
in this model, goods are made to order when requested
doesn’t carry a large inventory of goods or raw materials
relies on a network of suppliers and distributors to move raw materials in and product out of the factory
this approach depends on digital communication system and IT infrastructure to coordinate between all parties
ADVANTAGES DISADVANTAGES | |
Highly flexible manufacturing ideal for short runs | Greater risk of manufacturing delays - production and quality control issues in one area can delay the whole system |
Low waste as there is no over-production, little idle time and material uses is optimised | Delay between ordering and delivery - customers must wait longer (compared to JIC) to receive item |
Lower costs as there is little to no inventory to manage - raw materials are used almost immediately and products are shipped very soon after manufacture | Manufacturers cannot benefit from economies of scale to the same degree because they purchase smaller quantities of raw materials |
(10.2) - LEAN PRODUCTION
lean production - aims to eliminate waste and maximise the value of a product based on the perspective of the consumer
Advantages
increased productivity - due to focus on kaizen and waste reduction
increased quality - focus on improvement and reduction of defects
cost reduction - cause the manufacturer is able to pass on cost savings to the customer
increased profits - through cost reduction + increased customer satisfaction
improved working conditions for employees
competitive advantage - cause of focus on cost reduction + productivity
reduced environment impact - due to reduction of waste of materials
Disadvantages
high initial costs - need to invest in JIT + JIC systems and IT systems
difficult to introduce to an existing workforce - as change can be scary for some people
dependent on a highly integrated system - if there’s a breakdown in communication, deliveries or production, the whole manufacturing system can come to a halt
no inventory can make it difficult to respond to sudden increases in demand
Characteristics of Lean Production
JIT Supplies/Systems
the correct amount of material and parts delivered at the right time to eliminate inventory
Highly trained, multi-skilled workforce
using experts in production engineering and to ensure no time and materials are wasted
Zero inventory
manufactured product are shipped immediately, avoiding the need for managing inventory
Zero defects
avoid defects by ensuring that no substandard materials and production practices are used
Quality control and continuous improvement
an active approach to improvement; Quality control and checks happen at all stages of the production
Principles of Lean Production
Minimising inventory to reduce inventory management costs
Elimination of all waste - time, material, reduction of errors and defects
Designing for rapid production changeover to allow for efficient retooling and changes in production goals
Pulling production from customers demand, a JIT systems is used to drive production rather than a JIC systems
Partnering with suppliers to operate a successful and efficient JIT system
Doing it right first time - empahises quality and reduces waste
Maximising production flow to take advantage of economies of scale
Empowering workers as they are the most valuable resource in the company
Focus on Kaizen
Meeting customer requirements - taking every single customer complaint and opinion of products or services seriously; the flexibility of the lean production system determines the degree to which a company can meet each individual customer’s needs
Value Stream Mapping
Concerned with the big picture of the production process.
the goal is to identify areas for improvement, optimising the overall process
Its a lean production management tool used to analyse current and future processes to produce a product through to delivery to the consumer
Workflow Analysis
Concerned with the details of the production line
it considers the sequence, tools and even worker movements to ensure the highest possible efficiency in the system
Kaizen
A philosophy of continual improvement
it’s played a significant role in the success of many Japanese companies - most notably Toyota
Emphasises the workforce as the most valuable component of a manufacturing system.
This is founded on the belief that no system is perfect, and those in the system (workers) are best placed to suggest improvements
Training a skilled workforce develops an intimate understanding of the production process and empowers workers to identify areas for improvement
such an approach empowers employees across all levels, such systems are more horizontal than hierarchical
The 5 S’s
A method for organising the workplace with the goal of improving efficiency of production
The 7 Wastes in Lean Manufacturing
^identifies the areas of waste, negatively affecting a lean production system
(10.3) - Computer Integrated Manufacturing
<aside> 🎀
^uses computers to automatically monitor and control the entire production of a product
</aside>
CIM integrates all aspects of production (not just manufacture) to optimise this process
ALL teams collaborate and share information with the goal of optimising production.
It’s a highly integrated computer networking system that combined JIT principles with a Lean Manufacturing approach.
Elements of CIM
Design
Use of CAD/CAM to deign, prototype and iterate a design.
CAD to stimulate parts or features and conduct FEA to generate performance data
Software can generate a Bill of Materials (BOM) and files or digital assets to manufacture parts.
Planning
Using the data provided by the Design team, the Planning team will generate a production plan that considers production costs, available processes, scheduling, etc.
Purchasing
The Purchasing team will co-ordinate buying of materials and parts to product the product.
Inventory is kept to a minimum (through JIT principles).
Inventory control software orders replacement parts and materials when they reach low levels.
Manufacturing
Manufacturing is closely connected to Purchasing and Design.
Using the digital files and assets produced by the design team, products are manufactured using CAM and automated manufacturing systems.
Use of materials and parts is closely integrated with inventory control and purchasing systems.
Cost Accounting
The Finance team uses software to manage accounts and payments, integrated with Inventory Control and Purchasing.
Cost Accounting ensures production is uninterrupted.
Inventory Control
Inventory control ensures that materials and parts are reordered in a timely manner.
Locations of materials and parts within the production process can be tracked.
Inventory control co-ordinates with warehousing and shipping to ensure inventory levels stay at an appropriate level in keeping with JIT principles.
Distribution
Distribution uses computerised systems to manage and organise the storage of raw materials, finished products, and shipping to the next phase of the chain, consumer, client etc.
These types of systems make use of bar codes, RFID chips, and increasingly AI technologies to manage and track items in the system.
CIM Systems + Scales of Manufacturing
CIM systems allow companies to operate with a global scope, while achieving economies of scale. The integrated systems streamline the whole process, from design to manufacture to distribution. The integrated monitoring of all systems, particularly manufacturing, means that errors and problems can be quickly identified and resolved.
CIM Comparison
(10.4) - Quality Management
<aside> 🎀
Key Terms:
tolerance - the allowable amount of variation within a particular quality
inspection - the checking of qualities at different stages throughout the production process
destructive - testing a product or part that destroys or physically alters the part
heat resistance, compression, toughness
non-destructive testing - testing a product or part that measures physical properties
weighing, checking colour, confirming dimensions </aside>
Quality Control
The aim of quality control is to produce the same part repeatedly with minimum or so waste
QC starts with the identification of a tolerances
Tolerances are identified at the design stage
Its necessary to know the degree of tolerance the machine that will produce that part can operate at
Different machinery operate at different tolerances. Knowing the capability of the machine and designing for this can ensure that tolerances are at an acceptable level. Quality control at the source eliminates waste from defects.
Statistical Process Control (SPC)
The goal of SPC is to reduce waste, increase productivity and discover abnormalities in a process to facilitate timely decision making
Its a statistical tool that ensures a process operates efficiently (this involves measuring aspects of a product or process to identify inefficiencies and opportunities for improvement)
Examples
Car manufacturers collecting data on types and frequency of repairs, rate of wear and tear on parts such as brake pads, and data from car accidents and crashes to improve quality and safety of the automobile.
Quality Assurance
The goal of QA is to reduce or avoid errors or defective products being delivered to the customer, from design to documentation.
It includes the regulation of the quality of raw materials, assemblies, products and components, services related to production, and management and inspection processes.
QA is designed to set standards of quality for all stages, from raw materials to product delivery. QA focuses on processes and procedures that ensure quality, they are not checks to ensure a product is within tolerance.
(10.5) - Economic Viability
<aside> 🎀
key terms:
cost - the expense of developing and producing a product and bringing it to market
price - the amount a customer pays for a product
profit margin - is the amount of money earned after all costs, taxes etc have been paid </aside>
Cost Effective
An analysis of cost associated with the materials, scale of production, distribution and marketing of a product can determine whether a product is financially viable to bring to market.
Cost effectiveness focuses on strategies that minimise the cost of producing a product.
Value for Money
Value for money is the relationship of an object or service between the value it provides and the cost to purchase it.
Ultimately, the consumer decides if the value a product provides is worth the cost to purchase.
This is subjective, not all consumers see the same value in a product.
Fixed Costs
Fixed costs are costs that do not change, regardless of the level of production.
They are time-based and include rent, salaries, insurance, warehousing etc.
fixed costs make up one part of the total cost of a product
Variable Cost
Variable costs change with the level of production
They are related to volume
these could include raw materials, energy, wages and distribution
Variable costs make up second component of the total cost of a product
Total Costs
The total cost of a product is calculated by adding together the fixed and variable costs
Cost Analysis
Cost analysis is a tool used to determine the feasibility of producing a product.
Analytical tools can be used to measure the cost of producing the product and the expected profit it can generate
Break-even Point
The Break-Even is the point of balance between profit and loss
It is the number of sales required to cover the total costs (fixed and variable).
The BEP represents the point at which sales start to generate profit
Calculating Price and Pricing Strategies
Designers need to consider the economic viability of their product.
If it is not economically viable it is unlikely to be brought it to market.
Many strategies and tools are used to calculate the product price, and these are often used alongside price setting strategies to determine the price.
(10.3) - Computer Integrated Manufacturing
^uses computers to automatically monitor and control the entire production of a product
CIM integrates all aspects of production (not just manufacture) to optimise this process
ALL teams collaborate and share information with the goal of optimising production.
It’s a highly integrated computer networking system that combined JIT principles with a Lean Manufacturing approach.
Elements of CIM
Design
Use of CAD/CAM to deign, prototype and iterate a design.
CAD to stimulate parts or features and conduct FEA to generate performance data
Software can generate a Bill of Materials (BOM) and files or digital assets to manufacture parts.
Planning
Using the data provided by the Design team, the Planning team will generate a production plan that considers production costs, available processes, scheduling, etc.
Purchasing
The Purchasing team will co-ordinate buying of materials and parts to product the product.
Inventory is kept to a minimum (through JIT principles).
Inventory control software orders replacement parts and materials when they reach low levels.
Manufacturing
Manufacturing is closely connected to Purchasing and Design.
Using the digital files and assets produced by the design team, products are manufactured using CAM and automated manufacturing systems.
Use of materials and parts is closely integrated with inventory control and purchasing systems.
Cost Accounting
The Finance team uses software to manage accounts and payments, integrated with Inventory Control and Purchasing.
Cost Accounting ensures production is uninterrupted.
Inventory Control
Inventory control ensures that materials and parts are reordered in a timely manner.
Locations of materials and parts within the production process can be tracked.
Inventory control co-ordinates with warehousing and shipping to ensure inventory levels stay at an appropriate level in keeping with JIT principles.
Distribution
Distribution uses computerised systems to manage and organise the storage of raw materials, finished products, and shipping to the next phase of the chain, consumer, client etc.
These types of systems make use of bar codes, RFID chips, and increasingly AI technologies to manage and track items in the system.
CIM Systems + Scales of Manufacturing
CIM systems allow companies to operate with a global scope, while achieving economies of scale. The integrated systems streamline the whole process, from design to manufacture to distribution. The integrated monitoring of all systems, particularly manufacturing, means that errors and problems can be quickly identified and resolved.
CIM Comparison
(10.4) - Quality Management
<aside> 🎀
Key Terms:
tolerance - the allowable amount of variation within a particular quality
inspection - the checking of qualities at different stages throughout the production process
destructive - testing a product or part that destroys or physically alters the part
heat resistance, compression, toughness
non-destructive testing - testing a product or part that measures physical properties
weighing, checking colour, confirming dimensions </aside>
Quality Control
The aim of quality control is to produce the same part repeatedly with minimum or so waste
QC starts with the identification of a tolerances
Tolerances are identified at the design stage
Its necessary to know the degree of tolerance the machine that will produce that part can operate at
Different machinery operate at different tolerances. Knowing the capability of the machine and designing for this can ensure that tolerances are at an acceptable level. Quality control at the source eliminates waste from defects.
Statistical Process Control (SPC)
The goal of SPC is to reduce waste, increase productivity and discover abnormalities in a process to facilitate timely decision making
Its a statistical tool that ensures a process operates efficiently (this involves measuring aspects of a product or process to identify inefficiencies and opportunities for improvement)
Examples
Car manufacturers collecting data on types and frequency of repairs, rate of wear and tear on parts such as brake pads, and data from car accidents and crashes to improve quality and safety of the automobile.
Quality Assurance
The goal of QA is to reduce or avoid errors or defective products being delivered to the customer, from design to documentation.
It includes the regulation of the quality of raw materials, assemblies, products and components, services related to production, and management and inspection processes.
QA is designed to set standards of quality for all stages, from raw materials to product delivery. QA focuses on processes and procedures that ensure quality, they are not checks to ensure a product is within tolerance.
(10.5) - Economic Viability
key terms:
cost - the expense of developing and producing a product and bringing it to market
price - the amount a customer pays for a product
profit margin - is the amount of money earned after all costs, taxes etc have been paid </aside>
Cost Effective
An analysis of cost associated with the materials, scale of production, distribution and marketing of a product can determine whether a product is financially viable to bring to market.
Cost effectiveness focuses on strategies that minimise the cost of producing a product.
Value for Money
Value for money is the relationship of an object or service between the value it provides and the cost to purchase it.
Ultimately, the consumer decides if the value a product provides is worth the cost to purchase.
This is subjective, not all consumers see the same value in a product.
Fixed Costs
Fixed costs are costs that do not change, regardless of the level of production.
They are time-based and include rent, salaries, insurance, warehousing etc.
fixed costs make up one part of the total cost of a product
Variable Cost
Variable costs change with the level of production
They are related to volume
these could include raw materials, energy, wages and distribution
Variable costs make up second component of the total cost of a product
Total Costs
The total cost of a product is calculated by adding together the fixed and variable costs
Cost Analysis
Cost analysis is a tool used to determine the feasibility of producing a product.
Analytical tools can be used to measure the cost of producing the product and the expected profit it can generate
Break-even Point
The Break-Even is the point of balance between profit and loss
It is the number of sales required to cover the total costs (fixed and variable).
The BEP represents the point at which sales start to generate profit
Calculating Price and Pricing Strategies
Designers need to consider the economic viability of their product.
If it is not economically viable it is unlikely to be brought it to market.
Many strategies and tools are used to calculate the product price, and these are often used alongside price setting strategies to determine the price.