Handbook of Production Management Methods
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Handbook of Production
Management Methods
Gideon Halevi
OXFORD AUCKLAND BOSTON JOHANNESBURG MELBOURNE NEW DELHI
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Butterworth-Heinemann
Linacre House, Jordan Hill, Oxford OX2 8DP
225 Wildwood Avenue, Woburn, MA 01801-2041
A division of Reed Educational and Professional Publishing Ltd
A member of the Reed Elsevier plc group
First published 2001
© Reed Educational and Professional Publishing Ltd 2001
All rights reserved. No part of this publication
may be reproduced in any material form (including
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means and whether or not transiently or incidentally
to some other use of this publication) without the
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Applications for the copyright holder’s written permission
to reproduce any part of this publication should be
addressed to the publishers
British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Agile Manufacturing
Artificial intelligence
Autonomous enterprise
Autonomous production cells
Benchmarking
Bionic manufacturing system
Borderless corporation
Business intelligence and data warehousing
Business process re-engineering (BPR)
CAD/CAM, CNC, Robots Computer-aided
design and manufacturing 81
Cellular manufacturing 85
Client/server architecture 87
Collaborative manufacturing in virtual
enterprises 88
Common-sense manufacturing CSM 90
Competitive edge 93
Competitive intelligence CI 95
Search addresses on the Web 98
Computer-aided process planning CAPP 98
Computer integrated manufacturing CIM 101
Concurrent engineering (CE) 105
Constant work-in-process CONWIP 109
Cooperative manufacturing 111
Computer-oriented PICS COPICS 112
Core competence 114
Cost estimation 117
Cross-functional leadership 119
Customer relationship management CRM 122
Customer retention 125

Kanban system 199
Knowledge management 201
Lean manufacturing 204
Life-cycle assessment LCA 207
Life-cycle management 207
Life-cycle product design 207
Manufacturing enterprise wheel 210
Manufacturing excellence 211
Manufacturing execution system (MES) 213
Master product design 216
Master Production Scheduling 219
Material requirements planning MRP 222
Material resource planning MRPII 224
Matrix shop floor control 225
Mission statement 227
Mobile agent system 229
Multi-agent manufacturing system 231
One-of-a-kind manufacturing (OKM) 234
Optimized production technology OPT 236
Outsourcing 237
Partnerships 241
Performance measurement system 243
Product data management PDM & PDMII 246
Product life-cycle management 249
Production information and control system
PICS 251
Quality function deployment QFD 253
Customer value deployment CVD 254
Random manufacturing system 255
Reactive scheduling 257

process must consider the interests of other disciplines. These interests of the
different disciplines may conflict with one another, and a compromise must be
made. Managers and the problems they wish to solve in their organization set
particular requirements, and compromises are made by ‘weighting’ each of
these requirements. Different organizations will have different needs and thus
differently weighted requirements.
More than 110 different methods have been proposed to improve the manu-
facturing cycle. Each of the proposed methods improves a certain aspect or
several aspects of the manufacturing cycle. The list of methods shows that
some are of a technological nature, while others are organizational and archi-
tectural, and yet others focus on information technology. Some are aimed at
lead-time reduction, while others aim at inventory reduction, and yet others
focus on customer satisfaction or organizational and architectural features. In
some methods environmental issues are becoming dominating, while others
focus on respect for people (workers); many of these proposed methods are
based on human task groups.
Such a variety of methods and objectives makes it difficult for a manager to
decide which method best suits his/her business.
The aim of this book is to present to the reader a brief description of pub-
lished manufacturing methods, their objectives, the means to achieve the
objectives, and to assist managers in making a method selection decision. To
meet the objective, over 1000 published papers in journals, conferences,
books, and commercial brochures were reviewed and summarized to the best
of our ability. Other authors might consider some methods differently. We
hope that we have been objective in our summations. The reader may refer to
the bibliography to find further details of each method.
Although some specific decision-making methods are described, they are
not obligatory. They are used merely to demonstrate that a methodic decision
can be made. Each manager should examine and decide how best to make this
decision.

consuming project. There is no one system that is best for everyone. We hope
that this book will be of assistance in making the right decision, in selecting an
appropriate manufacturing method/methods for specific company needs.
Gideon Halevi
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1
Trends in manufacturing
methods
The role of management in an enterprise is to:
•
implement the policy adopted by the owners or the board of directors
•
optimize the return on investment
•
efficiently utilize men, machines and money;
and most of all – to make profit.
The manufacturing environment may differ with respect to:
•
size of plant;
•
type of industry;
•
type of production (mass production, job shop, etc.).
The activities may involve
•
developing and producing products;
•
producing parts or products designed by the customer;
•

•
costing and bookkeeping
•
storage, packing and shipping
•
material handling
•
human resource planning.
Management’s task is to make sure that the requirements of all disciplines are
considered and to coordinate and direct their activities.
As enterprises grew in size and complexity, the problem of coordinating
and managing the various activities increased. As a result, an organizational
structure developed wherein independent departments were established, each
having responsibility for performing and managing a given general type of
activity. This organizational structure established a chain of activities. Each
discipline (department) accepts the decisions made by the previous depart-
ment, regards them as constraints, optimizes its own task, makes decisions
and transfers them to the next department. While this organizational approach
helped to create order out of chaos, it nevertheless tended to reduce the opera-
tion of a manufacturing enterprise to an ungainly yet comfortable amalgam of
independent bits and pieces of activity, each performed by a given department
or individual. As a result, interaction and communication between the various
departments and individuals carrying out these activities suffered greatly.
Therefore, the attainment of such attributes as overall efficiency and excellence
of performance in manufacturing, although improved by the organizational
approach, was still handicapped by its shortcomings.
The initial attempt by management to coordinate and control enterprise
operations involved building an organizational structure that encompassed
mainly the technological departments and tasks. The philosophy and assump-
tion was that if the technology disciplines could accomplish the objectives of:

Production is very complex
. Therefore we need more and more complex
computer programs and systems to regulate and control it.
2.
Production is very complex
. Therefore THE only way to make such systems
more effective is to simplify them.
3.
Production is very complex
. Therefore there is no chance of building a sys-
tem to solve the problems. Hence the role of computers should be limited
to supplying data and humans should be left to make decisions.
The first group believes that more and more complex computer programs and
systems need to be developed to regulate and control production management.
Such methods include:
•
PICS – production information and control system
•
COPICS – communication-oriented production information and control
system
•
IMS – integrated manufacturing system.
These methods (and others) use logic and production theories as with previous
manual methods, but by computer rather than manually. The disciplines con-
sidered include:
•
Engineering design
•
Process planning
•

straints and to the constraints set by the routing stage.
The master production schedule is a long-range plan. Decisions concerning
lot size, make or buy, additional resources, overtime work and shifts, and con-
firmation or change of promised delivery dates are made until the objectives
can be met.
Material requirements planning (MRP)
The purpose of this stage is to plan
the manufacturing and purchasing activities necessary in order to meet the
targets set forth by the master production schedule. The number of produc-
tion batches, their quantity and delivery date are set for each part of the final
product.
The decisions in this stage are confined to the demands of the master
production schedule, and the optimization criteria are meeting due dates,
minimum level of inventory and work-in-process, and department load bal-
ance. The parameters are on-hand inventory, in-process orders and on-order
quantities.
Capacity planning
The goal here is to transform the manufacturing require-
ments, as set forth in the MRP stage, into a detailed machine loading plan
for each machine or group of machines in the plant. It is a scheduling and
sequencing task. The decisions in this stage are confined to the demands of
the MRP stage, and the optimization criteria are capacity balancing, meeting
due dates, minimum level of work-in-process and manufacturing lead time.
The parameters are plant available capacity, tooling, on-hand material and
employees.
Shop floor
The actual manufacturing takes place on the shop floor. In all prev-
ious stages, personnel dealt with documents, information, and paper. In this
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Trends in manufacturing methods 5

function based on the assumption that resources have infinite capacities. This
simple assumption leads to unrealistic and infeasible plans and schedules. The
infinite capacity assumption forces procurement of materials earlier than is
actually needed and sets unrealistic due dates. To reduce the impact of these
problems, a more recent generation of MRP systems introduces rough-cut
capacity planning within the MRP, and is termed MRPII – manufacturing
resource planning. It improves planning but does not eliminate the problems
altogether.
MRP starts with the product but the planning logic breaks this down into
individual items. When one item falls behind the scheduled plan, there is no
easy way to re-plan all other items of the affected product, thus increasing
work-in-process and jeopardizing delivery dates. A modification in the form of
‘pegging’ is added as a patch, but it is informative data rather than working data.
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6 Handbook of Production Management Methods
Capacity planning logic to solve an overload or underload situation involves
pulling jobs forward or pushing jobs backward. This logic contradicts the
objectives of production management. Pulling jobs forward increases work-
in-progress (WIP) and therefore increases the capital tied up in production.
Pushing jobs backwards is almost certain to delay delivery dates.
To solve these problems, systems developers turned to the third philosophy;
developing ‘user friendly’ systems. Here, the user is responsible for storing
and retrieving data in the appropriate files and making decisions accordingly.
It is the user’s responsibility to decide what data to store, the quality of the
data, its validity and completeness and its correctness. Therefore, the ‘production
systems’ are always in the clear. If unreasonable decisions are made, it is the
user’s fault.
While solving the logistics of the production planning problem, another
problem arose, the interdisciplinary information system, information such as
customer orders, purchasing, inventory, etc. Each of these disciplines devel-

generally was not recognized as being in vogue because of implementation
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Trends in manufacturing methods 7
problems. One of the main deficiencies of GT was the method of forming the
families. Although promoted quite hard in the 1970s, only a few factories
implemented GT as a processing method, but it had some success in CAPP –
computer-aided process planning.
Kanban is a Japanese word that means ‘visual record’ and refers to a manu-
facturing control system developed and used in Japan. The kanban, or card as
it is generally referred to, is a mechanism by which a workstation signals the
need for more parts from the preceding station. The type of signal used for a
kanban is not important. Cards, coloured balls, lights and electronic systems
have all been used as kanban signals. A unique feature that separates a true
kanban system from other card systems (such as a ‘travel card’ used by most
companies), is the incorporation of a ‘pull’ production system. Pull production
refers to a demand system whereby products are produced only on demand
from the using function. Thus production planning is simple and actually runs
itself without the need to schedule and plan.
The system raised some interest in the west, but only a few plants used this
method, probably because kanban is most suited to plants with a repeated pro-
duction cycle. For one-time orders the cards are used only once, and the bene-
fit of pulling jobs cannot be obtained.
Kanban systems are most likely to be associated with just-in-time (JIT)
systems.
The philosophy of JIT manufacturing is to operate a simple and efficient
manufacturing system capable of optimizing the use of manufacturing
resources such as capital, equipment and labour. This results in the develop-
ment of a production system capable of meeting a customer’s quality and
delivery demands at the lowest manufacturing price. The production system
motto is to obtain or produce something only when it is needed (just in

software and hardware, and thus industrial robots were developed. A com-
puter can read signals from any binary device and employ a selected algorithm
to make decisions and execute them by means of computer output signals, and
thus automated guided vehicles were developed. Because there are virtually
no limits to the possible applications that may benefit from the use of computer-
aided manufacturing systems, the trend is to use more and more computer-
controlled manufacturing resources.
The potential for using computers as machine members was far too great
to stop at individual machines, and soon spread to combined applications
such as automatic warehousing, flexible manufacturing cells (FMC), flexible
manufacturing systems (FMS), and the ideas of the automatic or unmanned
factory.
The three fields of computer applications in industry – computers as data
processing, computers as machine members, and computers as engineering
aids – were rapidly accepted. However, they were developed as islands of
automation. The transfer of data and information between one and the other
was by manual means. Therefore, it was logical that the next step in the devel-
opment of computer applications in industry would be to combine the three
separate application fields in one integrated system. This system was called
Computer Integrated Manufacturing (CIM). CIM is a technology that com-
bines all advanced manufacturing technologies into one manufacturing system
that is capable of:
•
rapid response to manufacturing and market demands;
•
batch processing with mass-production efficiency;
•
mass production with the flexibility of batch production;
•
reducing manufacturing cost.

tion management.
Such technologies were not available in the early 1980s.
Another reason might be that CIM systems technology is especially sensit-
ive to the neglect of human factors.
The fact that CIM could not deliver the required control and benefits created
a need for a new paradigm for manufacturing methods. In addition, the com-
petitive markets of the late 1980s and early 1990s imposed new demands and
objectives on the manufacturing process that also called for a new paradigm
for manufacturing methods. The new demands were: short time to market;
product diversity and options; quality products; customer satisfaction and
customer seductiveness and competitive prices. The addition of the above
market demands resulted in substantial rethinking of the initial CIM sys-
tem concept. This led to the realization that the initial CIM system concept
needed to be broadened from one which encompassed primarily the techno-
logical operation of an enterprise to one that encompasses both technological
and managerial operations of an enterprise as an integrated manufacturing
operation.
From the late 1980s to the late 1990s there were tremendous advances in
the field of computer science. The technological problems that inhibited the
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10 Handbook of Production Management Methods
success of CIM were solved. Communication between computers, terminals
and machines became common practice. Database capacity grew tremend-
ously while now storage and retrieval time shortened. Using computers as
machine members is taken for granted, and most processing resources are
computerized.
However, there was no breakthrough in developing algorithms and meth-
odology in the field of basic engineering and production management. Devel-
oping algorithms for management methods and for processing in different
fields takes a lot of time and large-scale effort. Research and development in

based on teamwork and computer programs that provide storage retrieval,
computation and simulation services. Humans were made the centrepiece of
the architecture of the system because they must be the overall driving force
and controllers of the functions to be performed in the plant. The basic tech-
nology and engineering data is supplied by the human user who also makes
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Trends in manufacturing methods 11
logical decisions. Most of the proposed methods emphasize the need for each
discipline of the manufacturing process to consider the objectives and prob-
lems of other disciplines. However, each proposed method is mainly directed
to respond to the needs of a specific discipline.
The flood of proposals, with each one directed towards the needs of a dif-
ferent discipline, makes it difficult to decide which method is the best manu-
facturing method for any specific enterprise. In the 1960s and 1970s there
were only a few methods to select from and the manufacturing methods life
cycle was several years. The life cycle in the 1990s was much shorter. For
example total quality management (TQM) was a ‘hit’ in 1994; and billions of
dollars were spent on its installation. In 1997 a new paradigm took its place;
enterprise resource planning (ERP) became the new fashion. And again
billions of dollars were spent on installing it. Towards 1998 enterprise
resource management (ERM) replaced or enhanced ERP. In 1999 competition
between customer relation management (CRM) and supply chain manage-
ment occurred.
In this book the proposed methods are introduced, and mapped according to
the activities they aimed to improve, such as reduced inventory; reduced lead
time and time to market, improved communication, etc. In this way a manager
will be able to select a method that is most suited to his/her organization.
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2
List of manufacturing

List of manufacturing methods 13
18 Competitive intelligence – CI
19 Computer-aided process planning – CAPP
20 Computer integrated manufacturing – CIM
21 Concurrent engineering – CE
22 Constant work-in-process – CONWIP
23 Cooperative manufacturing
24 Computer-oriented PICS – COPICS
25 Core competence
26 Cost estimation
27 Cross-functional leadership
28 Customer relationship management – CRM
29 Customer retention
30 Cycle time management – CTM
31 Demand chain management
32 Digital factory
33 Drum buffer rope – DBR
34 E-business
35 E-manufacturing – F2B2C
36 Electronic commerce
37 Electronic data interchange – EDI
38 Electronic document management – EDM
39 Enterprise resource planning – ERP
40 Environment conscious manufacturing – ECM
41 Executive excellence
42 Expert systems
43 Extended enterprise
44 Flat organization
45 Flexible manufacturing system – FMS
46 Fractal manufacturing system

75 Mobile agent system
76 Multi-agent manufacturing system
77 One-of-a-kind manufacturing – OKM
78 Optimized production technology – OPT
79 Outsourcing
80 Partnerships
81 Performance measurement system
82 Product data management – PDM and PDMII
83 Product life-cycle management
84 Production information and control system – PICS
85 Quality function deployment – QFD
86 Random manufacturing system
87 Reactive scheduling
88 Self-organizing manufacturing methods
89 Seven paths to growth
90 Simultaneous engineering – SE
91 Single minute exchange of dies – SMED
92 Statistical process control – SPC
93 Strategic sourcing
94 Supply chain management
95 Taguchi method
96 Team performance measuring and managing
97 Theory of constraint – TOC
98 Time base competition – TBC
99 Total quality management – TQM
100 Value chain analysis
101 Value engineering
102 Virtual company
103 Virtual enterprises
104 Virtual manufacturing