11.1 Operations Management in Manufacturing
Managing manufacturing operations effectively would involve checking your quality control production process, such as how your products are produced. Also, it includes checking your customer service, how to reduce waste, and looking into applicable technological changes. To perform this function in today’s business environment, manufacturers must continually strive to improve operational efficiency. They must fine-tune their production processes to focus on quality, to hold down the costs of materials and labor, and to eliminate all .
Among the characteristics of a company that shape corporate and therefore manufacturing strategy are its dominant orientation market or productpattern of diversification product, market, or processattitude toward growth acceptance of low growth rateand choice between competitive strategies high profit margins versus high output volumes. Once the basic attitudes or priorities are established, […]. Once the basic attitudes or priorities are established, the manufacturing arm of a company must arrange its structure and management so as to reinforce these corporate aims.
When they are operating smoothly, they are almost invisible. But manufacturing is getting increasing attention from business managers who, only a few years ago, were preoccupied with marketing or financial matters. The fact is that in most companies the great bulk of the assets used—the capital invested, the people what to do when pulling an all nighter, and management time—are in the what gets wax off skin side of the business.
This is true of both manufacturing and service organizations, in both the private and public sectors of our economy. The problems and pressures facing manufacturing companies ultimately find their way to the factory floor, where managers have to deal with them through some sort of organizational structure. Unfortunately, this structure often is itself part of the problem.
For example:. And to what extent were these problems the outgrowth of how to manage manufacturing operations designed organizational structures? Finally, we will discuss the various kinds of growth that companies can experience and how these expectations should affect the organization of the manufacturing function. The concept of manufacturing strategy is a natural extension of the concept of corporate strategy, although the latter need not be as rational and explicit as management theorists usually require.
We use the term company to refer to a business unit that has a relatively homogeneous product line, considerable autonomy, and enough of a history to establish the kind of track record we refer to here. Dominant orientation —Some companies are clearly market oriented. They consider their primary expertise to be the ability how to manage manufacturing operations understand and respond effectively to the needs of a particular market or consumer group.
In exploiting this market knowledge, they use a variety of products, materials, and technologies. Gillette and Head Ski are examples of such companies. Other companies are clearly oriented to materials or products; they are so-called steel companies, rubber companies, or oil companies or, more recently, energy companies. They develop multiple uses for their product or material and follow these uses into a variety of markets. Still other companies are technology-oriented—most electronics companies fall into this class—and they follow the lead of their technology into various materials and markets.
A how to manage manufacturing operations characteristic of a company with such a dominant orientation is that it seldom ventures outside that orientation, is uncomfortable when doing so, often does not appreciate the differences and complexities associated with operating the new business, and then often fails because it hesitates to commit the resources necessary to succeed.
Every company continually confronts a variety of growth opportunities. Its decisions about which to accept and which to reject signal, in a profound way, the kind of company it prefers to be. Some companies, in their concentration on a particular market, geographic area, or material, essentially accept the growth permitted by that market or area or material consumption.
Other companies, however, are so structured and managed that a certain rate of growth is required in order for the organization to function properly. Choice of competitive priorities —In its simplest form this choice is between seeking high profit margins or high output volumes. Some companies consistently prefer high margin products, even when this limits them to relatively low market shares.
Others feel more comfortable with a high-volume business, despite the fact that this commits them to severe cost-reduction pressure and often implies low margins. This concept can be expanded and enriched, however, since companies can compete in ways other than simply through the prices of their products.
Some compete on how to manage manufacturing operations basis of superior quality—either by providing higher quality in a standard product for example, Mercedes-Benz or by providing a product that has features or performance characteristics unavailable in competing products. We intend here to differentiate between an actual quality differential and a perceived difference, how to manage manufacturing operations is much more a function of selling and advertising strategy.
It will, however, work as specified, is delivered on time, and any failures are immediately corrected. Still others compete on the basis of product flexibility, their ability to handle difficult, nonstandard orders and to lead in new product introduction.
This is a competitive strategy that smaller companies in many industries often adopt. And, finally, others compete through volume flexibility, being able to accelerate or decelerate production quickly. Successful companies in cyclical industries like housing or furniture often exhibit this trait.
In summary, within most industries different companies emphasize one of these five competitive dimensions—price, quality, dependability, product flexibility, and volume flexibility. It is both difficult and potentially dangerous for a company to try to compete by offering superior performance along several competitive dimensions.
Instead, a company must attach definite priorities to each that describe how it chooses to position itself relative to its competitors.
Practically every decision a senior manager makes will have a different impact on each of these dimensions, and the organization will thus have to make trade-offs between them. Unless these trade-offs are made consistently over time, the company will slowly lose its competitive distinctiveness.
One test of whether a company has a strategy is that it is clear not only about what it wants to do but also about what it does not want to do—what proposals it how to manage manufacturing operations consistently say no to. Once such attitudes and competitive priorities are identified, the task for manufacturing is to arrange its structure and management so as to mesh with and reinforce this strategy.
Manufacturing should be capable of helping the company do what it wants to do without wasting resources in lesser pursuits. It is surprising that general managers sometimes tend to lose sight of this concept, since the need for priorities permeates all other arenas of management. For example, marketing managers segment markets and focus product design, promotional, and pricing effects around the needs of particular segments, often at the expense of the needs of other segments.
And management information systems must be designed to emphasize particular kinds of information at the expense of others. While it is possible to chalk up to inexperience the belief of many general managers that manufacturing should be capable of doing everything well, it is harder to explain why many manufacturing managers themselves either try to be good at everything at once or focus on the wrong thing.
They know that all-purpose tools generally are used only when a specific tool is not available. Perhaps they fall into this trap because of pride, or too little time, or how to change dns entry they are reluctant to say no to their superiors.
All these factors enter into the following scenario. Under duress, and without sufficient time to examine the trade-offs involved, he attempts to shore up performance along these dimensions. Then he is confronted with pressure from finance to reduce costs or investment or both. Falling into such a trap can be devastating, however, because a manufacturing mission that is inconsistent with corporate strategy is just as dangerous as not having any manufacturing mission at all.
They will reflect engineering priorities, or operating simplicity often the goal of someone who has worked his way up from the bottom of the organization —not the needs of the business. Translating a set of manufacturing priorities into an appropriate collection of plant, people, and policies requires resources, time, and management perseverance. Moreover, these assets tend to be massive, highly interrelated, and long lived—in comparison with marketing and most financial assets.
Once a change is made, its impact is felt throughout the system and cannot be undone easily. The decisions that implement a set of manufacturing priorities are structural; for a given company or business they are made infrequently and at various intervals. They fall into two broad categories: facilities decisions and infrastructure decisions. The total amount of manufacturing and logistics capacity to provide for each product line over time.
How this capacity is broken up into operating units plants, warehouses, and so ontheir size and form a few large plants versus many small onestheir location, and the degree or manner of their specialization for example, according to product, process, and so on.
The span of the process—that is, the direction of vertical integration toward control either of markets or of suppliersits extent as reflected roughly by value added as a percentage of salesand the degree of balance among the capacities of the production stages.
Policies that control the loading of the factory or factories—raw material purchasing, inventory, and logistics policies. Policies that control the movement of goods through how to manage manufacturing operations factory or factories—process design, work-force policies and practices, production scheduling, quality control, logistics policies, inventory how to manage manufacturing operations. These two sets of decisions are closely intertwined, of course.
Similarly, work-force policies interact with location and process choices, and purchasing policies interact with vertical integration choices. Each of these structural decisions places before the manager a variety of choices, and each choice puts somewhat different weights on the five competitive dimensions. For example, an assembly line is highly interdependent and inflexible but generally promises lower costs and higher predictability than a loosely coupled line or batch-flow operation or a job shop.
Similarly, a company that attempts what is 3 of 20 adjust production rates so as to chase demand will generally have higher costs and lower quality than a company that tries to maintain more level production and absorb demand fluctuations through inventories. Even more subtly, plant may be consistent with policies, but the manufacturing organization that attempts to coordinate them all no longer does its job effectively.
For, in a sense, the organization is the glue that keeps manufacturing priorities in place and welds the manufacturing function into a competitive weapon. It also must embody the corporate attitudes and biases already discussed. In addition, the way manufacturing chooses to organize itself has direct implications for the relative emphasis placed on the five competitive dimensions. Certain types of organizational structures are characterized by high flexibility; others encourage efficiency and tight control, and still others promote dependable promises.
How are the appropriate corporate priorities to be maintained in a manufacturing organization that is characterized by a broad mix of products, specifications, process technologies, production volumes, skill levels, and customer demand patterns? To answer this question, we must begin by how to manage manufacturing operations between the administrative burden on the managements of individual plants and that on the central manufacturing staff.
Each alternative approach for organizing a total manufacturing system will place different demands on each of these groups. At one extreme, one could lump all production for all products into a single plant.
This makes the job of the central staff relatively easy in some respects it becomes almost nonexistentbut the job of the plant management becomes horrendous. At the other extreme, one could simplify the job of each plant or operating unit within a given plantso that each concentrates on a more restricted set of activities products, processes, volume levels, and so how to fix broken laptop screens by yourselfin which case the coordinating job of the central organization becomes much more difficult.
Although many companies adopt the first approach, by either design or default, in our experience it becomes increasingly unworkable as more and more complexity is put under one roof.
At some point a single large plant, or a contiguous plant complex, breaks down as more products, processes, skill levels, and market demands are added to it. Skinner has argued against this approach and for the other extreme in an article in which he advocates dividing up the total manufacturing job into a number of focused units, each of which is responsible for a limited set of activities and objectives:.
Quality and volume levels are not mixed; worker training and incentives have a clear focus; and engineering of processes, equipment, and materials handling are specialized as needed. Each [unit] gains experience readily by focusing and concentrating every element of its work on those limited essential objectives which constitute its manufacturing task.
If we adopt this sensible but radical approach, we are left with the problem of organizing the central manufacturing staff in such a way that it can effectively manage the resulting diversity of units and tasks. It carries out this responsibility both directly, by establishing and monitoring the structural policies we mentioned earlier for example, process design, capacity planning, work-force management, inventory control, logistics, purchasing, and the likeand indirectly, by measuring, evaluating, and rewarding individual plants and managers, and through the recruitment and systematic development of those managers.
These basic duties can be performed in a variety of ways, however, and each will communicate a slightly different sense of how to manage manufacturing operations. The corporate staff clearly must play a much how to manage manufacturing operations active role how to grow a red maple bonsai tree making the second organization work.
Logistics movements have to be carefully coordinated, and a change in any of the plants or the market can have repercussions throughout the system. Only at the last stage Process C can the plant manager be measured on a profitability basis, and even that measure depends greatly on negotiated transfer prices and the smooth functioning of the rest of the system. He will not have much opportunity to exercise independent decision making, since most variables under his control capacity, output, specifications, and so on will affect everybody else.
The distinction between such product-focused and process-focused manufacturing organizations should not be confused with the distinction between traditional functional and divisional corporate organizations. In fact, it is entirely possible that two divisions within a divisionally organized how to manage manufacturing operations would choose to organize their manufacturing groups differently.
The important distinction has less to do with the organization chart than with the role and responsibilities of the central manufacturing staff and how far authority is pushed down the organization. In a sense, the distinction is more between centralized control and decentralized control. Basically, the product-focused organization resembles a traditional plant-with-staff organization, which then replicates itself at higher levels to handle groups of plants and then groups of products and product lines.
Meeting Customer Expectations Of Real-Time Responsiveness And Quality
Operations Management Learning Objectives 1) Define operations management and discuss the role of the operations manager in a manufacturing company. 2) Describe the decisions and activities of the operations manager in overseeing the production process in a manufacturing company. 3) Explain how to create and use both PERT and Gantt charts. This method allows you to study and determine ways to diminish potential problems within your business operations. This type of analysis is more common in manufacturing and assembly businesses. How to plan work. All other activities are initiated from the production plan, and each area is dependent on the interaction of the activities.
Overcoming the challenges of making company-wide manufacturing operations more customer driven needs to start with a clear definition of what success looks like. Defining the strategic goal of having all production centers contributing to a series of company-wide lean manufacturing, supply chain, quality, and production, service and customer satisfaction goals galvanize diverse production locations together.
Instead of having to rely on many different, disconnected systems to manage diverse production locations to a common set of goals, manufacturers are adopting company-wide Manufacturing Execution Management MES systems. Planning and scheduling, quality management, inventory optimization, tooling management, preventative and predictive maintenance, and Manufacturing Intelligence are the core functional areas included in an MES today.
Across all selling and service channels customers expect real-time responses to their questions in addition to product quality that is world class. How well a manufacturer meets or exceeds these expectations will have as big impact on their future growth opportunities. The core components of this strategy are available in an MES. Increasing customer trust, making on-time order shipments, earning a reputation for high-quality products, achieving traceability, and optimizing production scheduling are all achievable with manufacturing operations management strategies.
The following ten steps serve as a guideline for getting started:. The worst-performing product lines often have multiple problems, from lack of customer awareness and sales to production scheduling, quality, traceability challenges or fulfillment problems. With an underperforming product it will also be easier to capture the factors contributing to its turnaround. Resist the tendency to add in dozens of metrics and KPIs.
Instead, concentrate only on the most relevant to streamlining manufacturing operations. Consider creating a roadmap of the most relevant metrics and KPIs that need to be added in the future once additional data collection systems and processes are in place. The goal of this step is to capture machine-level data that can be used for calculating Overall Equipment Effectiveness OEE and the additional metrics and KPIs on the dashboard.
Process-related parameters at the machine level also need to be captured and aggregated to the work center and plant level. These metrics will be used over time to calculate machine or asset utilization value.
This data will also be used for defining analytics that monitors machine performance against set limits. Gaining data from older machines could provide insights into how the product could potentially be redesigned for more efficient manufacturing too.
Create and test the real-time integration links that will power the dashboard. Then make the dashboard live on a company Intranet site just to the cross-functional team members.
Making change management work starts with a senior executive being on the team to remove organizational and technical issues that block progress. Providing an overview of the pipeline along with incentives and any special promotions needs to be the focus of marketing and sales. Quality needs to cover any blocking issues or challenges, and manufacturing operations, the overall effectiveness of the strategy.
Finance can provide insights into how any shifts in production strategy as a result of the data have improved gross margins. In short every team member needs to provide insights that can help determine how best to improve product performance. The foundation of any solid manufacturing operations management strategy is real-time, accurate, reliable data.
Adding in predictive analytics ability that can interpret and provide recommendations on quality data is invaluable for improving operations. Getting real-time integration enabled between accounting and MES will provide financial insights that can guide further strategies for improving manufacturing performance.
With the MES providing the data for the dashboard and a member of the senior management team owning the manufacturing operations management strategy, there is a very good chance of success. With the pilot completed, scaling the operations management strategy to every plant will go more smoothly based on the lessons learned.
For more than 25 years, IQMS has been designing and developing manufacturing ERP software for the repetitive, process and discrete industries. The extended single-database enterprise software solution, EnterpriseIQ, offers a scalable system designed to grow with the client and complete business functionality, including accounting, quality control, supply chain, shop floor, CRM and eBusiness.
For more information, please visit iqms. Tweet Like Plus Share. Having accurate, real-time production visibility improves product quality, order accuracy and customer satisfaction while driving down manufacturing costs at the plant level.
Keeping manufacturing operations across all locations focused on a common set of goals improves gross margins, reducing the total cost per unit while improving on-time order delivery and perfect order performance.
The era of Manufacturing Intelligence has arrived, fueled by data from Manufacturing Execution Systems MES , with manufacturing operations management strategies accelerating adoption company-wide. Improving product quality, reducing cycle times, automating manual workflows and streamlining plant floor operations are a few of the many benefits of adopting a company-wide manufacturing operations management strategy. Meeting Customer Expectations Of Real-Time Responsiveness And Quality Across all selling and service channels customers expect real-time responses to their questions in addition to product quality that is world class.
Making quality a core part of production operations with each plant making contributions to overarching quality goals instead of allowing it to be a siloed function.
Achieving real-time supply chain, order management and production performance visibility across all manufacturing operations. Excelling at data collection to the machine, team and plant level including piloting Internet of Things IoT as a means to capture data in real-time.
Defining manufacturing operations analytics that encompasses all production centers and provides updates on Overall Equipment Effectiveness OEE and Manufacturing Intelligence. The following ten steps serve as a guideline for getting started: 1. Select an underperforming product line as the basis for a pilot to define a manufacturing operations framework.
Define a common set of metrics and KPIs that can scale across all manufacturing operations and create a useful dashboard. Define how the MES will capture machine-level data including equipment utilization and key process parameters. For purposes of the pilot, enable older machines with PLCs and add-on sensors.
Define and test all the system integration links necessary to capture the metrics and KPIs needed for the dashboard.
Gain senior management support by having a VP or C-level executive lead the cross-functional team responsible for fine-tuning the manufacturing operations strategy. Use pilot data to begin a company-wide Manufacturing Intelligence strategy.
Start planning for greater integration between ERP and MES to provide financial insights into manufacturing operations. Conclude the pilot and define a timeline for the company-wide launch of a manufacturing operations strategy based on the insights gained. Post Tagged: Manufacturing Operations Management. Website: IQMS.
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