Module 1
Module 1
Introduction
The value addition to an input can be done in the following ways. They are
mentioned below:
1. Alteration
It refers to the transformation of the state of input. This transformation
can be a physical change in the input to produce goods.
2. Transportation
It refers to physical movement of goods from one location to another.
3. Storage
It refers to preserving goods in a protected environment.
4. Inspection
It refers to the verification of and confirmation towards the requirements
of an entity.
System Concept
The term system denotes plan, method, order and arrangement.
System is an assembly or combination of things or parts forming a
complex or unitary as a whole.
If organizational units are designed and operated as a system, each
segment or subsystem can be viewed as a self contained unit and its
relationship or contribution to the next level can be programmed and
measured.
A system is an arrangement of components designed to achieve a
particular objective (or objectives) according to plan. The components
may be either physical or conceptual or both, but they all share a unique
relationship with each other and with the overall objective of the system.
TYPES OF SYSTEMS
COMPONENTS OF SYSTEM
If units are designed and operated as a system, each segment or subsystem can
be viewed as a self contained unit & its relationships or contribution to the next
level can be performed and measured. Inputs, transformation process and output
are the components of any system. Input and output are mere significant than
the actual transformation process.
‘Black box’ approach is used to demonstrate the relationship let computes and
systems. A component is a basic unit or black box which performs or provides
the facility for performing some part of the transformation process. A teacher –
component in education or university system, may be taken for medical
illustration as a system with several sub systems. The definition of what is a
system, subsystem, components occurs when the objectives of those systems are
determined.
6 SYSTEM DESIGN
One of the most vital inputs to systems design comes from the consumers or
users. They embody the service objectives of the organization and are also the
ultimate source of funds for the operations. Since the system functions to serve
the consumers, their quantity and cost requirements, as well as quality and other
technological desires, should be incorporated into the production systems
design. Business history has vividly proved that orientation to the consumers is
a key element in an organization's success. This holds true for public and
nonprofit organizations as well as profit-making firms.
The more structured the design is, the less planning and decision making will be
involved in the operation of the system. Similarly, a highly structured design,
although suitable for high-volume production of standardized products, is
inherently less adaptable to meeting competitive pressures of broader product
lines in smaller volumes upon shorter notice from the customer. An increasingly
important consideration in modern systems design arises from the need for
flexibility and adaptability, of the system to meet new and unexpected demands.
Fortunately, both physical equipment and human components can be geared to
accept change, especially if the system has been designed with this inevitability
in mind.
Operations Strategy
Operations strategy the approach, consistent with the organization strategy, that
is used to guide the operations function. Operations strategy is narrower in
scope, dealing primarily with the operations aspect of the organization.
Operations strategy relates to products, processes, methods, operating resources,
quality, costs, lead times, and scheduling.
Generic Competitive
Priorities: Quality,
Strategic Options for
Cost, Delivery,
Sustaining Competitive
Flexibility
Advantage
Measures for
Strategic Decisions for Operational Excellence
Operations System Operations Strategy
Step 1: Understand the Competitive Market Dynamics:
Any strategy-making exercise begins with scanning the marketplace and
understanding its dynamics. Market dynamics direct the organisation
toward the issues it should consider while formulating its operations
strategy. It provides useful information on competitors, the nature of
offerings that they make to the customer, customer expectations, missing
links between expectations and current offerings, and the intensity of
competition.
Key Functions
Major Functions
i )Routing: It chalks out the requisite work operations and orders thereof.
iii) The requisite quantity of the product is delivered to the customer before or
on the scheduled date, and
4) Industrial Engineering:
iv) Ensuring the uninterrupted supplies, including that of the raw materials to
the plant.
10) Plant Layout and Materials Handling: Machines and equipment should
be arranged in the plant in such a manner that the production cycle keeps on
going without any hindrance. In an efficient plant layout, through a proper
material handling mechanism, the cost of production may be curtailed
drastically, as they (efficient plant layout and proper material handling) ensure
the minimum wastage of men and material.
Service Operations
1) Intangibility: Unlike physical products, services are intangible; they can not
be seen, touched, or smelt. Also, the consumer cannot sample a service in
advance.
Accordingly, it becomes difficult for the consumer to judge a service before it is
bought; he has no tangibles' to go by for judging the service in advance; he
cannot know its exact outcome in advance. The person getting a face lift cannot
see the exact results before the purchase, and the patient in the psychiatrist's
office cannot know the exact outcome.
ii) Inseparability of the service from the person who possesses the skill and
performs the service
i) The inseparability of the service from the provider leads to some variability,
the provider of the service being inseparable from the service, variability
automatically enters the picture, depending on the person performing the
service.
ii) Services are highly people intensive. And, anything that is people intensive is
bound to be marked by variability. Services are often categorized on the basis of
the type of people who provide them like unskilled services, skilled services,
and complete professional services. In the case of physical products, who
produces the product is immaterial.
iii) In services, the effect varies dependent on when and where the service is
provided. As a combined result of the three factors, services are marked by a
high degree of variability/individuality/ heterogeneity.
4) Inventory/Perishability: Services are perishable as well. They cannot be
stored. Like inseparability/immediacy, this is also an offshoot of the fact that
services are produced and consumed simultaneously. There are no inventories
in case of a service. It is because of its perishability that, often a client is billed
even if he does not avail of the service after having booked it.
The approach has been pioneered by McDonald's where the delivery of fast
food is treated as a manufacturing process rather than as a service process. The
approach overcomes some of the inherent drawbacks of services. Service
implies subordination of the server to the served. Manufacturing, on the other
hand concentrates on things rather than people. McDonald's orientation is
towards the efficient production of results and not on the attendance on others.
It aims at the rapid delivery of a uniform, high quality mix of prepared foods in
an environment obvious cleanliness, order and cheerful courtesy. Everything is
built into the system through attention to total design and facilities planning.
The attendant has no other choice but to operate it exactly as the designers
intended. McDonald's can be classified as a face to-face service with tight
specifications.
1. Craft Production
2. Mass Production
3. Lean Production
1. Craft Production
Another shortcoming was that production costs did not decrease as volume
increased; there were economies of scale, which would have provided a no
major incentive for companies to expand. Instead, many small companies
emerged, each with its own set of standards.
2. Mass Production
Mass production systems are systems where lower skilled workers use
specialised machinery to produce high volumes of standardised goods. Henry
Ford introduced the mass production to the automotive industry, a system of
production in which large volumes of standardised goods are produced by low
skilled or semi-skilled workers using highly specialised, and often costly,
equipment. Ford was able to do this by taking advantage of a number of
important concepts.
Perhaps the key concept that launched production interchangeable parts, Ford
was mass accomplished this by standardising the gauges used to measure parts
during production and by using newly developed processes to produce uniform
parts. A second concept used by Ford was the division of labour, Together,
these concepts enabled Ford to tremendously increase the production rate at his
factories using readily available inexpensive labour.
Disadvantages
Initial costs: It takes a lot of capital and time to build a factory equipped
with specialized machinery. Specialized machinery costs a lot of money,
and so does the factory floor space needed to hold assembly-line
machinery. Initial costs can make it hard for smaller businesses to mass
produce their products. However, it’s a worthwhile investment for
companies who are confident their sales and productivity can cover initial
costs.
Less flexibility: Factory managers can’t walk up to a machine and ask it
to stop what it’s doing and complete a different task. Specialized
machinery used in mass production is designed to do one specific job.
This level of inflexibility can sometimes be problematic. For example, if
there’s an error in production, companies may have to redesign their
process. This can be costly. Or, if regulations change, manufacturers may
have to make significant adjustments. Lastly, it can be hard to keep up
with ever-changing consumer demands if a company does not have the
means to be flexible.
Energy consumption: Factories that mass produce goods use powerful
machinery which requires substantial amounts of energy. According to
the U.S. Energy Information Administration, the industrial sector was
responsible for 22.4 percent of energy consumption in 2017. As natural
resource conservation is a concern across the globe, companies need to
consider ways to maximize energy efficiency when using mass
production techniques.
Pollution: Simply said, factories cause pollution. During the Industrial
Revolution, for example, factories polluted the water and air by burning
coal and producing metals and chemicals. They also directly released
pollutants into rivers and streams. Industrial pollution is still an issue
today. For example, according to UNESCO, just about all manufacturing
activities create pollutants as byproducts, and water pollution is on the
rise around the world. In the United States alone, the automobile industry
is responsible for the release or transfer of millions of pounds of
lead each year.
Affects employees’ wellbeing: Mass production and assembly lines
involve repetitive work. Factory employees may spend their entire shift
standing in the same spot, doing the same tasks over and over. This can
leave employees feeling unmotivated, bored or isolated. Repetitive
motions can also lead to conditions like carpal tunnel syndrome. When
employees feel unappreciated or unfulfilled, factories face high turnover
rates.
Lack of product uniqueness: Mass-produced goods lack uniqueness. In
today’s world, many consumers want customized products that feel
personal and express their identity. Some manufacturers offer customized
products, while others do not have the capabilities to mass produce
custom goods. As consumer demand for customized products continues
to grow, manufacturers will need to adopt new technology, like 3-D
printers, to evolve.
Inventory buildup: Mass production creates large quantities at once. As
a result, products may build up before they can be sold. Excess inventory
requires a large amount of warehouse space which costs money and
energy to maintain. Although manufacturers can sell extra stock to
discount retailers, they can also benefit from limiting inventory as much
as possible.
3. Lean Production
Advantages
1. Waste Minimization
Lean focuses on loyal customers' concerns and suggestions to cut some wasteful
processes. Rather than focusing on the needs of all customers, companies are
able to focus on their loyal customers to build strong and reliable relationship.
This way, your customer interactions will improve and the relationships with
your trusted customers will offer a steady flow of revenue coming in.
3. Lean Infrastructure
A lean infrastructure means that you are only dealing with a few components:
building, tools, supplies, equipment, and labor to fulfill near-term inventory
demand. The facility does not waste space within the operation and enables the
facility to come as close as it can to production efficiency.
Disadvantages
1. Equipment Failure
Lean has very little room for error. Equipment or labor failure can lead to major
inconsistencies and can make the entire operation fall behind. In other mass
production facilities, employees could move from one machine to another in the
event of a breakdown. In lean, there are not many other places for employees to
move to because everything within the operation is being utilized. In addition,
the breakdown of a machine must be fixed immediately as there are usually no
alternative resources that can do the work. This is why it is important to stay on
top of all machine maintenance and inspections.
2. Delivery Inconsistencies
Advantages:
Limitations
2. Higher level of inventory at all levels and hence higher inventory cost.
BATCH PRODUCTION
Advantages:
1. Better utilisation of plant and machinery.
Limitations:
CONTINUOUS PRODUCTION
Limitations:
Project Production
When there is a fast build up, staff is either borrowed from other
departments or hired for short duration. Therefore, personnel
involved in the project have limited (or short lived) interest in the
project.
Since each project has a limited duration, the staff starts spending
more time forgetting prepared for the next project.
Site for the project may be in the underdeveloped region and it may
change from project to project which causes dislocation of the
normal life.
Advantages
Workers are often more motivated and take pride in their work.
Disadvantages
Production can take a long time and can have higher production
cost, (e.g., if special materials or tools are required).
Repetitive Manufacturing
Repetitive manufacturing is the factory process function in which products are
produced for rapid production flow. A distinguishing property of repetitive
manufacturing is its primary utilization of assembly and/or production lines,
specializing in repetitive production.
Because the items being produced are so similar, the setup time is significantly
lower than compared to other manufacturing methods. This allows for a shorter
manufacturing lead time.
Advantages
Disadvantages