Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
CHAPTER 5:
Manufacturing
5-2
•
The quality imperative
•
Manufacturing perspective
•
Manufacturing strategy
•
Contemporary
manufacturing
developments
Overview of manufacturing
5-3
The 8 dimensions of product quality
•
Performance
–
How well the product performs in
comparison to how it was
designed to perform
•
Reliability
–
Likelihood that the product will
perform throughout its expected
life
•

5-4
•
Total quality management (TQM) is a
philosophy focused on meeting customer
expectations with respect to all needs,
across all company functions, and
recognizing all customers, both internal and
external
•
TQM’s basic conceptual elements are:
–
Top Management commitment and support
–
Maintaining a customer focus in product, service
and process performance
–
Integrated operations within and between
organizations
–
A commitment to continuous improvement
Total quality management
5-5
Management standards have been established
by the ISO in both quality and environment
The International Organization for Standards
(ISO) was formed after World War II
ISO 9000—International Quality Standard
First one established in 1994
Currently transitioning to ISO 9000:2008
ISO 14000—International Environmental

the principle of economy of scale
–
Average cost to produce product declines as
manufacturing volume increases
–
Particularly important when high fixed costs are
present
•
Variety involves frequent product runs and
high repetition of small lot sizes
–
Processes that can rapidly switch production
from one product to another while retaining
efficiency are said to have economy of scope
Manufacturing perspectives
5-8
•
Constraints interact with volume and variety to create
realistic manufacturing plans
–
Capacity is how much can you produce in a given unit of time
–
Equipment considers how flexible it is
•
Is one particular piece a bottleneck?
–
Setup/Changeover considers how quickly can you change from
one variety of product to another
•
Leadtime is the measure of elapsed time between release

Requires much interaction with customer to work out design and specification
–
Usually shipped direct to customer
•
Assemble to Order (ATO) is when base components are made,
stocked to forecast, but products are not assembled until customer
order is received
–
Manufacturing postponement practiced here
•
Make to Stock (MTS) features economies of scale, large volumes,
long production runs, low variety, and distribution channels
Manufacturing strategies should match
market requirements
5-11
The choice of strategy determines which
performance cycles the customer experiences
Figure 5.1 Manufacturing Strategy and Performance Cycles
Product Design Procurement Cycle Manufacturing Cycle Customer Delivery
Cycle
ETO
Strategy
MTO
Strategy
ATO
Strategy
MTP
Strategy
Total Cycle Experienced by Customers.
5-12

volume goes up
•
Transportation costs go down as volume goes
up, but level off at high volumes
Total cost of manufacturing
5-14
TCM per unit ranging across strategic
alternatives
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Second level
Third level
Fourth level
Fifth level
/MTS
Figure 5.2 Total Cost of Manufacturing
5-15
•
Mass customization
•
Flexible manufacturing
•
Lean systems
•
Six sigma
•
Requirements planning
•
Design-for-manufacture
•
Design-for-logistics

5-18
Manufacturing capability examples
•
Mass Customization
•
Fast, Lean Launch
•
Mix/Volume Response
•
Robust Operations
5-19
What is it?
•
Objectives, key capabilities
Where does it work?
•
Market, industry, technological characteristics
What does it take to succeed?
•
Resources and relationships
•
Priorities, processes, and practices
•
Cross functional interfaces
•
Metrics
For each strategy we’ll discuss:
5-20
Individually customized products produced at the low
cost of standardized, mass produced goods.

•
Standardized process/skill building blocks
•
Reasonable lead times, steps, work content
Mass customization:
Where does it work?
5-22
•
Sense
–
Direct relationships with customers – demand management
–
Technologies: measurement, data capture, communication, CRM, POS
•
Interpret
–
Technologies: imaging, data translation, configuration management,
CAD/CAE/CAPP
–
Product modularity and good configuration management
•
Respond
–
Close relationships with supply chain elements (VI?)
–
Technologies: CAM, FMS, mixed model lines, digital tracking and control,
cellular mfg
•
Critical functional integration:
–

–
Manage varying conditions (product, process, geography) with
standardized launch process
–
Smart use of platform design and modularity strategies
–
Learning organization – ability to quickly develop and adopt new skills
and processes
Lean launch example: BMW
5-25
•
Manage reaction to “discipline” imposed on product design
•
Shape value system to add launch quality as a priority while
preserving design flexibility
•
Find manufacturing talent to make contributions in NPD
•
Balance competing priorities of production vs. prototyping on the
shop floor
•
Manage critical functional integration: Design-Mfg
Lean launch: Key challenges