Simulation as tools for competitive manufacturing

• “Simulation is the imitation of the operation of the real-world process or system over time. Simulation involves the
generation of an artificial history of the system and the observation of that artificial history is draw inferences
concerning the operating characteristics of the real system that is represented”. [Banks J et al 1996]

• A simulation is a model that mimics reality; well-known examples are flight simulators and business games.

• Simulation is used before an existing system is altered or a new system is built, to reduce the chances of failure to
meet specifications, to eliminate unforeseen bottlenecks, to prevent under or over-utilization of resources, and to
optimize system performance.

• The operation of the model can be studied, and hence, properties concerning the behavior of the actual system or its
subsystem can be inferred. For instance, simulation can be used to answer questions like: What is the best design for a
new telecommunications network? What are the associated resource requirements? Etc.
• The model takes a set of expressed assumptions i.e. mathematical, logical, … symbolic relationship between the
entities and can be used to investigate a wide verity of “what if” questions about real-world system.
✓ Potential changes to the system can be simulated and their impact on the system predicated.
✓ Find adequate parameters before implementation

• Simulation can be used as analysis tool for predicating the effect of changes and design tool to predicate the
performance of new system.

• One of the largest application areas for simulation modelling is that of manufacturing systems. Simulation
technology holds tremendous promise for reducing costs, improving quality, and shortening the time-to-market for
manufactured goods.
The following are some of the specific issues that simulation is used to address in manufacturing:
• Number and type of machines for a particular objective
• Number, type, and physical arrangement of transporters, conveyors, and other support equipment (e.g.,
jigs & fixtures)
• Location and size of inventory buffers
• Evaluation of a change in product volume or mix
• Evaluation of the effect of a new piece of equipment on an existing manufacturing system
• Evaluation of capital investments
• Labor-requirements planning
• Throughput analysis
• Time-in-system analysis
• Bottleneck analysis
• Production scheduling
• Inventory policies
• Control strategies [e.g., for an automated guided vehicle system (AGVS)]
• Reliability analysis (e.g., effect of preventive maintenance)
• Quality-control policies
• Times parts spend in queues
• Queue sizes
• Timeliness of deliveries
• Utilization of equipment or personnel
Simulation steps
1. Problem Definition. Clearly defining the goals of the study so that we know the purpose, i.e. why are we studying this
problem and what questions do we hope to answer?
2. Project Planning. Being sure that we have sufficient and appropriate personnel, management support, computer
hardware and software resources to do the job.
3. System Definition. Determining the boundaries and restrictions to be used in defining the system (or process) and
investigating how the system works.
4. Conceptual Model Formulation. Developing a preliminary model either graphically (e.g. block diagram or process flow
chart) or in pseudo-code to define the components, descriptive variables, and interactions (logic) that constitute the system.
5. Preliminary Experimental Design. Selecting the measures of effectiveness to be used, the factors to be varied, and the
levels of those factors to be investigated, i.e. what data need to be gathered from the model, in what form, and to what
extent.
6. Input Data preparation. Identifying and collecting the input data needed by the model.
7. Model Translation. Formulating the model in an appropriate simulation language.
8. Verification and Validation. Confirming that the model operates the way the analyst intended (debugging) and that
the output of the model is believable and representative of the output of the real system.
9. Final Experimental Design. Designing an experiment that will yield the desired information and determining how each
of the test runs specified in the experimental design is to be executed.
10. Experimentation. Executing the simulation to generate the desired data and to perform sensitivity analysis.
11. Analysis and Interpretation, Drawing inferences from the data generated by the simulation runs.
12.. Implementation and Documentation. Reporting the results, putting the results to use, recording the findings, and
documenting the model and its use.
In general the simulation model used in the area of Manufacturing Systems Engineering (MSE) can be classified as :
(i) Static and Dynamic Simulation Models
(ii) Continuous and Discrete Simulation Model
(iii) Stochastic and Deterministic Simulation Model

(i) Static and Dynamic Simulation Models

• There are two types of simulation modelling: static and dynamic.
• Static models are systems of equations that are solved once.
It is a representation of a system at a particular point in time. This type of model is defined as having structure without
activity, i.e. where simulation process will not evolve over time. Example of this type is Monte Carlo simulation models
and many spreadsheet-based analytical models.
• Dynamic models add a time dimension. Mathematical computations tied to processes are performed at time intervals,
allowing the modeler to study a system as it evolves over time. Since most business processes have a time dimension so
more stress is given to dynamic simulation.
(ii) Continuous and Discrete Simulation Model

• In continuous models, time passes linearly and the processes vary directly with time. The inputs of the continuous system may vary
continuously by infinitely small time intervals and the system responds to these inputs with continuous output. It is based on abstraction,
decomposition and aggregation, and involves one or more differential and/or algebraic equations, which describe the relationships existing
within the system. In this system, integration of differential equations has to be performed numerically on a digital computer.

• Discrete-event models deal with events and specific time intervals. Examples of discrete events include computer performance evaluation
and inventory dispatch systems. In discrete-event models, the occurrence of an event drives the model, whereas in continuous models, the
passing of time drives the model.

(iii) Stochastic and Deterministic Simulation Model

• Stochastic simulations generally have a probabilistic component, though not usually unconditioned probabilities. Stochastic simulations
generally must be performed a number of times until there is an adequate sample of results to evaluate, since any single “run” of a simulation
will have one of many possible outcomes. They are especially useful where much of the data has been amenable to statistical analysis, or
where the local behaviour of many systems is only understood in statistical terms, or where it is convenient to model many of the components
using statistical or probabilistic models, which is desirable much of the time, even if it is not in theory necessary. It is, for example, much easier
to model rainfall or warfare with a simple probabilistic model (sampling from an empirical distribution).

• Deterministic simulations are those where one solution set exists for a given input situation. In this, a system is simulated under well-
determined conditions. Its primary use is extrapolate and evaluate outcomes given hypothetical inputs, or to examine the interaction of a
number of interdependent deterministic models
Why is simulation so critical to manufacturing strategy?
• Manufacturing systems, processes, and data are growing ever more complex. Product design, manufacturing engineering,
and production management decisions often involve the consideration of many interdependent variables – probably too
many for the human mind to cope with at one time. These decisions often have a long term impact on the success or failure
of the manufacturing organization. It is extremely risky to make these major decisions based on “gut instinct” alone.
Simulation provides a capability to rapidly conduct experiments to predict and evaluate the results of alternative
manufacturing decisions. It has often been said that you do not really understand your industrial processes and systems
until you try to simulate.
• Manufacturing simulation focuses on modelling the behaviour of manufacturing organizations, processes, and systems.
Organizations, processes and systems include supply chains, as well as people, machines, tools, and information systems.
• Examples of manufacturing simulation applications include:
The modeling and verification of discrete and continuous manufacturing processes (e.g., machining, injection molding,
sheet metal forming, semiconductor fabrication), offline programming of robots and other machinery, site selection, layout
planning, process and system visualization, ergonomic analysis of manual tasks and work area layout, evaluation of
scheduling algorithms and dispatching rules, and business process engineering.
• Simulation models are built to support decisions regarding investment in new technology, expansion of production
capabilities, modeling of supplier relationships, materials management, human resources, and so forth – thus simulation
supports many of the strategic manufacturing target areas identified discussed above
Enterprise Resource Planning (ERP)
• An ERP system is a fully integrated business management system – covering functional areas of an enterprise
• It organizes and integrates – operation processes and information flows, to make optimum use of resources such as men,
material, money and machine
• ERP aims at one database, one application, and one user interface for the entire enterprise.
• “Integration” is the key word for ERP implementation.
• It may also integrate key customers and suppliers as part of the enterprise’s operation.
• It provides integrated database and custom-designed report systems.
• It adopts a set of “best practices” for carrying out all business processes.
Traditional Information System Model:
Closed Database Architecture
• Similar in concept to flat-file approach
– data remains the property of the application
– fragmentation limits communications
• Existence of numerous distinct and independent databases
– redundancy and anomaly problems
• Paper-based
– requires multiple entry of data
– status of information unknown at key points
Main ERP Applications
Core applications - Online Transaction Processing (OLTP)
• transaction processing systems
• support the day-to-day operational activities of the business
• support mission-critical tasks through simple queries of operational databases
• include Sales and Distribution, Business Planning, Production Planning, Shop Floor Control, and Logistics modules
Business analysis applications - Online Analytical Processing (OLAP)
• decision support tool for management-critical tasks through analytical investigation of complex data associations
• supplies management with “real-time” information and permits timely decisions to improve performance and
achieve competitive advantage
• includes decision support, modelling, information retrieval, adhoc reporting/analysis, and what-if analysis
Bolt-on Software
– third-party vendors provide specialized functionality software
– Supply-Chain Management (SCM) links vendors, carriers, third-party logistics companies, and information systems
providers
ERP Software Modules
• Financials
• Human Resources and Pay Roll
• Distribution/Logistics
• Sales & Marketing
• Manufacturing
– Product Data Management
– Material Planning
– Resource & Capacity Planning
– Shop Floor Management
– Quality Management, etc.
Features Of ERP:
• ERP provides multi-functions
• Functions are effectively integrated and information is immediately updated upon entry of any information.
• Has end to end Supply Chain Management
• ERP facilitates company-wide Integrated Information System covering all functional areas
• ERP performs core activities and increases customer service, thereby augmenting the corporate image.
• ERP bridges the information gap across organisations.
• ERP provides complete integration of systems not only across departments but also across companies under the same
management.
• ERP is the solution for better project management.
• ERP allows automatic introduction of the latest technologies
• ERP eliminates most business problems
• ERP provides intelligent business tools
Why Companies Undertake ERP:
• Standardise and speed up Manufacturing processes
• Standardise HR information
• Reduce Inventory
• Integrate Customer order information
• Integrate Financial Information

ERP Implementation Approaches

• The big bang – install a single ERP system across the entire organization
• Franchising – Independent ERP systems are installed in different units linked by common processes, e.g., book
keeping.
• Slam dunk – install one or several ERP modules for phased implementation of key business processes.
ERP systems
• require a major commitment and investment,
• often require companies to modify some of their processes to accommodate the software, and
• can take a long time to implement.
Major Phases of ERP Implementation
• Initiation – develop business case, project scope, and implementation strategy
• Planning – establish implementation team, determine goals and objectives, establish metrics
• Analysis and process design – analyze and improve existing processes, map new processes to be adopted by the system
• Realization – install a base system, customization, and test the system
• Transition – replace the formal system with the new system, data conversion
• Operation – monitor and improve system performance, provide continued training and technical support
Who are the main ERP vendors?
• Baan
• JD Edwards
• Oracle
• PeopleSoft
• SAP
ERP Products
• SAP: largest ERP vendor
– modules can be integrated or used alone
– new features include SCM (Component and Supplier Management), B2B, e-commerce, XML
• J.D. Edwards
– flexibility: users can change features; less of a pre-set structure than SAP’s
– modularity: accept modules (bolt-ons) from other vendors
• Oracle
– tailored to e-business focus
– Internet based vs. client-server based applications
• PeopleSoft
– open, modular architecture allows rapid integration with existing systems
• Baan
– use of “best-of-class” applications
Benefits of ERP
• Increased control of invoicing and payment processing
• Reduce paper documents
• Improves timeliness of information
• Greater accuracy of information
• Faster response and follow-up on customers
• More efficient cash collection
• Better monitoring and quicker resolution of queries
• Helps to achieve competitive advantage by improving its business process
• Provides a unified customer database usable by all applications
Major Challenges to ERP Implementation
• Inconsistency with existing business processes
• Costs - implementation (hardware, software, training, consulting) and maintenance
• Impact on organizational structure (front office vs. back office, product lines, etc.)
• Changes in employee responsibilities
• Flexibility of software system upgrades
• Implementation timelines
• Availability of internal technical knowledge and resources
• Education and training
• Implementation strategy and execution
• Resistance to change
New Developments in ERP
• Availability of web-based and wireless ERP systems
• Adoption of easy-to-install ERP systems
• Linkage to other software systems, e.g., supply chain management system, e-commerce, customer
relationship management system