Notes On MMS By S C MISHRA

--Prof.S.C.Mishra

PLANT LAYOUT

ACTIVITY RELATIONSHIP CHART :

The relative importance of having one department near another is displayed in an activity relationship chart .

Developed by Robert Muther

Diamond shaped cell : Relationship between two functional areas .

Two entries appear : A LETTER indicating the degree of closeness

A NUMBER representing main reason for the

relationship.

Legend :

Importance of closeness Reasons for closeness

A Absolutely necessary. 1. Use same equipment or

facilities.

E Especially important 2. Share same personnel or

records.

I Important 3. Sequence of workflow .

O Ordinary importance 4. Ease of communication.

U Unimportant 5. Unsafe or unpleasant

conditions.

X Undesirable 6. Similar work performed .

--Prof.S.C.Mishra

CAPACITY PLANNING

The effective management of capacity is the most important responsibility of operations management. The objective of capacity management (i.e., planning and control of capacity) is to match the level of operations to the level of demand.

Capacity planning is to be carried out keeping in mind future growth and expansion plans, market trends, sales forecasting, etc. It is a simple task to plan the capacity in case of stable demand. The fluctuation of demand creates problems regarding the procurement of resources to meet the customer demand. Capacity decisions are strategic in nature. Capacity is the rate of productive capability of a facility. Capacity is usually expressed as volume of output per period of time.

Production managers are more concerned about the capacity for the following reasons :

§ Sufficient capacity is required to meet the customers demand in time.

§ Capacity affects the cost efficiency of operations.

§ Capacity affects the scheduling system.

§ Capacity creation requires an investment.

Capacity planning is the first step when an organization decides to produce more or new products.

Measurement of Capacity :

It is easy and simple to measure the capacity of the unit manufacturing homogeneous tangible products which can be counted. The capacity of such units can be expressed in number of units of output per period. For example, the capacity of an automobile unit is expressed as number of vehicles produced per month. The capacity of steel plant is expressed as millions of tones per annum. Capacity of textile mill is expressed as metres of cloth per day.

It is difficult to express capacities when the company manufactures multiple products and some of the products requiring common facilities and other specialized facilities. In this situation measuring capacity is more complicated. In such situations, the capacity is not expressed as output per period of time but usually expressed as man-hours, machine hours or sometimes in terms of applicable resources.

Examples :

§ A job shop can measure its capacity in machine hours and/ or man-hours.

§ For hospitals it is expressed as bed days per month.

§ The transport system is expressed in seat kms per month.

Measures of capacity :

1. Design capacity : Designed capacity of a facility is the planned or engineered rate of output of goods or services under normal or full scale operating conditions.

For example, the designed capacity of the cement plant is 100TPD (Tonnes per day).

Capacity(designed) of the sugar factory is 150 tonnes of sugar cane crushing per day.

2. System capacity : System capacity is the maximum output of the specific product or product mix the system of workers and machines is capable of producing as an integrated whole. System capacity is less than design capacity or at the most equal it because of the limitation of product mix, quality specification, breakdowns. The actual is even less because of many factors affecting the output such as actual demand, downtime due to machine / equipment failure, unauthorized absenteeism.

The system capacity is less than design capacity because of long range uncontrollable factors. The actual output is still reduced because of short-term effects such as breakdown of equipment, inefficiency of labour. The system efficiency is expressed as ratio of actual measured output to the system capacity.

Actual Output

System efficiency (SE) =

System efficiency

3. Licensed capacity : Capacity licensed by the various regulatory agencies or government authorities. This is the limitation on the output exercised by the government.

4. Installed capacity : The capacity provided at the time of installation of the plant is called installed capacity.

5. Rated capacity : capacity based on the highest production rate established by actual trials is referred to as rated capacity.

DESIGN CAPACITY

Reduced by long range effects

Product mix, long range market conditions

Tight quality specifications

Imbalance in equipment or labour

SYSTEM CAPACITY

Reduced by short range effects

Actual demand, inefficiency of workers

Machine inefficiencies, scheduling

Planning and control

ACTUAL OUTPUT

Capacity and output relationship

Estimating future capacity needs

Long-term capacity strategies

Short-term capacity strategies

Multiple products

Phasing in capacity

Phasing out capacity

Short-term capacity strategies :

§ Inventories : Stock finished goods during slack periods to meet the demand during peak periods

§ Backlogs : During peak periods, the willing customers are requested to wait, and their orders are fulfilled after the peak demand period

§ Employment level (hiring and firing) : Hire additional employees during peak demand period and layoff employees as demand decreases.

§ Employee training : Develop multi-skilled employees through training so that they can be rotated among different jobs. The multi-skilling helps as an alternative to hiring employees.

§ Workforce utilization ; Employees are made to work overtime during peak hours and work fewer hours during slack hours (flexible work hours)

§ Subcontracting : During peak periods, hire the capacity of other firms temporarily to make the component parts or products.

§ Process design : Change job content by redesigning the job.

§ Maintenance : Temporarily discontinue routine maintenance so that the time can be utilized for production.

FACORS INFLUENCING EFFECTIVE CAPACITY

1. Forecasts of demand

2. Plant and labour efficiency

3. Subcontracting

4. Multiple shift operation

5. Management policy

Factors favouring over capacity and under capacity

It is very difficult to forecast demand as always there is an uncertainty associated with the demand. The forecasted demand will be either higher or lower than the actual demand. So always there is a risk involved in creating capacity based on projected demand. This gives rise to either over capacity or under capacity.

The over capacity is preferred when :

a) Fixed cost of the capacity is not very high.

b) Subcontracting is not possible because of secrecy of design and / or quality requirement.

c) The time required to add capacity is long.

d) The company cannot afford to miss the delivery, and cannot afford to loose the customer.

e) There is a economic capacity size below which it is not economical to operate the plant.

The under capacity is preferred when

a) The time to build capacity is short.

b) Shortage of products does not affect the company (i.e. lost sales can be compensated).

c) The technology changes fast, i.e. the rate of obsolescence of plant and equipment is high.

d) The cost of creating the capacity is prohibitively high.

MANAGEMENT OF MANUFACTURING SYSTEMS

--Prof.S.C.Mishra

Basic Management Decisions with regard to manufacturing function :

i) Location of Plant

ii) Plant Layout

iii) Manufacturing Process Analysis , Planning and Control

iv) Plant Maintenance

v) Methods Improvement and Work Simplification

vi) Quality Management

vii) Production Standards and Work Measurement

viii) Production Scheduling Techniques

Other areas of concern : Materials management – Inventory

Human resources : training and care , structure of wages / salaries , safety etc.

Goods and services in vast quantities – Available through production systems

Goods , services produced according to

Specification

In the amounts

By the schedule

At minimum cost

Manufacturing management associated with two broad areas of activity :

Design and

Control of production systems

Significant problems of production first occurred in the factory so as a field of knowledge manufacturing management developed largely in the factory.

Decide about Manufacturing Technology

Manufacturing Techniques

Set of equipments

This is long term decision valid for a fairly long time.

Selection of technology : Available technologies , Product Mix , Flexibility of adaptation.

Machines / Equipments : capacity , rate , cost parameters , range , size , efficiency , utilization.

Inputs , Process , Outputs ( G / S ) : Quality

Quantity Optimization

Cost

MANAGEMENT OF MANUFACTURING SYSTEMS

--Prof.S.C.Mishra

The Spectrum of Manufacturing Processes :

PROJECT JOB BATCH LINE CONTINUOUS

SHOP FLOW FLOW FLOW

1. Project :

Building a skyscraper

Making a movie

Makes heavy use of certain skills and capabilities at particular times and no use at other times.

Can often be seen as the coordination of part-time or subcontracted skills.

2. Continuous Flow Processes :

High volume consumer goods & commodities

Oil Refining

Food Processing

How long it takes to transform raw materials into a specific product ?

Capital investment and automation are higher.

Layout is product specific.

3. Job-Shop :

most flexible process for creating a wide variety of products.

fulfill particular customer orders.

The job-shop lives by its information flows , costs , times , routings , steps.

4. Batch-Flow Processes :

somewhat ,ore standardized than the job shop.

Job-shop & Batch-flow processes have a good deal in common.

Layouts are similar.

Batch flow processes have a set menu of products and set quantities ( Lot sizes )

e.g. semiconductor fabrication , apparel

5. Line Flow Processes :

lies closer to continuous flow processes . Moving assembly line

in auto-industry , consumer electronics and computers.

Product specific layout.

Depending upon the type of manufacturing system management becomes different.

Mass : one standard product almost continuously manufactured.

Jobbing : each product is different

very ideal situation

A product as varied as possible so that no customers return*.

Flexible Batch

comes from

· Manufacturing --- marketing conflict

Standard product : Television Technology is same

Fridge 2 door , 3 door

Models

Strategy Models A, b , C , D , E

How to manage ?

Model launching problem ?

Batch size of each model ?

C D E B A E C D B A

Need of computer

--Prof.S.C.Mishra

PLANT LAYOUT

Plant Layout : Integrating phase of the design of a production system .

Physical arrangement of industrial facilities.

Layout may be an actual installation

a plan

a job

After the decision on the site , production process and equipment has been made.

Efficiency and survival of the enterprise .

The development of a good layout is the result of a sequence of major decisions on

Location

Design capacity

General modes of manufacture

Selection of equipment

A poor layout is a source of constant loss to the company that installs it . The cost of changing the layout once it has been made is too great . So the losses can continue as a constant drain on the business.

Constraints : Physical due to site , size , roads , utilities,

Financial ( Capital available )

Environmental : State laws , Productivity requirements

Basis for developing integrated production system :

What to make ?

How it is to be made ?

How many to make ?

Integrated system must provide for

Machines

Workplaces

Storage

Because of the dynamic character of the economy , the design must retain an appropriate degree of flexibility to provide for future changes.

Main consideration in laying out work areas is the ease in the flow of work thru movement of

Materials

People ( hospital )

Information ( move papers )

Flow of material depends upon the production system used ---- Mass / Continuous or job-shop.

The basic information to be obtained in a quantitative approach to layout problem relates to :

i) the number of movements per unit time period ( load-summary)

ii) the costs per unit distance for movements

iii) the requirement of space for each work centre

iv) the available total work space and its configuration.

Why plant layout problems develop ?

Most plant layouts are stimulated by one of the following developments :

1. Product design change

2. New product

3. Changes in volume of demand

4. Facilities becoming obsolete

5. Frequent accidents

6. Poor worker environment

7. Changes in the location or concentration of markets

8. Cost reduction

Classes of layout problems :

1. Minor changes in present layouts

2. Existing layout rearrangement

3. Relocating into existing facilities

4. Building a new plant

Objectives :

1. Provide overall simplification

2. Minimize cost of materials handling

3. Provide high work-in process turnover

4. Provide effective space utilization

5. Provide for worker convenience , and promote job satisfaction and safety

6. Avoid unnecessary capital investment

7. Stimulate effective labor utilization.

OR

1. Overall integration of all factors affecting the layout.

2. Material moving a minimum distance.

3. Work flowing through the plant.

4. All space effectively utilized.

5. Satisfaction and safety fro workers.

6. A flexible arrangement that can be easily readjusted.

Process Layout :

Advantages :

1. Wide flexibility exists as regards allotment of work to equipment and workers.

2. Better utilization of the available equipment.

3. Comparatively less number of machines are needed thus involving reduced capital investment.

4. Better product quality , because the supervisors and workers attend to one type of machines and operations.

5. Varieties of jobs coming as different job orders make the work more interesting for the workers.

6. Workers in one section are not affected by the nature of the operations carried out in another section. For example, a lathe operator is not affected by the rays of welding as the two sections are quite separate.

Disadvantages :

1. For the same amount of production , process layout needs more space.

2. Automatic material handling is extremely difficult.

3. More material-in-process remains in que for further operations.

4. Completion of same product takes more time.

5. Work-in-process inventory is large.

6. Production control becomes difficult.

7. Raw material has to travel larger distances for getting processed to finished goods. This increases material handling and the associated costs.

8. It needs more inspections and efficient co-ordination.

Product Layout :

Advantages :

1. Less space requirement for the same volume of

production.

2. Automatic material handling , lesser material handling

movements , times and costs.

3. Less in-process inventory.

4. Product completed in lesser time.

5. Better coordination and simple production planning and control.

6. Smooth and continuous work flow.

7. Less skilled workers may serve the purpose.

Disadvantages :

1. The pace or rate of working depends upon the output rate of the slowest machine. This involves excessive idle time for other machines if the production time is not adequately balanced.

2. Machines being scattered along the line , more machines of each type have to be purchased for keeping a few as stand by , because if one machine in the line fails , it may lead to shut down of the complete production line. This is how product layout involves higher capital investments.

3. Though it involves less supervision as compared to process layout , sometimes it ( inspection ) becomes difficult when one inspector has to look after many ( say all welding ) machines in two or more production lines.

4. It is difficult to increase production beyond the capacities of the production lines.

5. Since the specific product determines the layout , a change in product involves major changes in layout and thus the layout flexibility is considerably reduced .

PRODUCTION PLANNING AND CONTROL

--Prof. S.C.Mishra

The Main Functions of PPC :

1. Materials Function : Raw materials, finished parts and brought out components should be made available in required quantities and at required time to ensure the correct start and end for each operation resulting in uninterrupted production. The function includes the specification of materials ( quality and quantity) delivery dates , variety reduction ( standardization) procurement and make or buy decisions.

2. Machines and equipment : This function is related with the detailed analysis of available production facilities, equipment downtime, maintenance policy procedure and schedules concerned with economy of jigs and fixtures, equipment availability. Thus, the duties include the analysis of facilities and making their availability with minimum downtime because of breakdowns.

3. Methods : This function is concerned with the analysis of alternatives and selection of the best method with due consideration to constraints imposed. Developing specifications for processes is an important aspect of PPC and determination of sequence of operations.

4. Process Planning ( Routing) : It is concerned with selection of path or route which the raw material should follow to get transformed into finished product. The duties include,

a) Fixation of path of travel giving due consideration to layout.

b) Breaking down of operations to define each operation in detail.

c) Deciding the setup time and process time for each operation.

5. Estimating : Once the overall method and sequence of operations is fixed and process sheet for each operation is available, then the operations time are estimated. This function is carried out using extensive analysis of operations along with methods and routing and a standard time for operation are established using work measurement techniques .

6. Loading and scheduling : Scheduling is concerned with preparation of machine loads and fixation of starting and completion dates for each of the operations. Machines have to be loaded according to their capability of performing the given task and according to their capacity. Thus the duties include :

a) Loading the machines as per their capability and capacity.

b) Determining the start and completion times for each operation.

c) To coordinate with sales department regarding delivery schedules.

7. Dispatching : This is the execution phase of planning. It is the process of setting production activities in motion through release of orders and instructions. It authorizes the start of production activities by releasing materials , components, tools, fixtures and instruction sheets to the operator. The activities involved are :

a) To assign definite work to definite machines, work centers and men.

b) To issue required materials from stores.

c) To issue jigs , fixtures and make them available at correct point of use.

d) Release necessary work orders, time-tickets, etc., to authorize timely start of operations.

e) To record start and finish time of each job on each machine or by each man.

8. Expediting : This is the control tool that keeps a close observation on the progress of the work. It is a logical step after dispatching which is called “follow-up” or “Progress reporting”. It coordinates extensively to execute the production plan. Progressing function can be divided into three parts :

Follow-up of materials,

follow-up of work-in-process and

follow-up of assembly.

The duties include :

a) Identification of bottlenecks and delays and interruptions because of which the production schedule may be disrupted.

b) To devise action plans (remedies) for correcting the errors.

c) To see that production rate is in line with schedule.

9. Inspection : it is major control tool. Though the aspects of quality control are the separate function, this is of very much importance to PPC both for the execution of the current plans and its scope for future planning. This forms the basis for knowing the limitations with respect to methods, processes, etc., which is very much useful for evaluation phase.

10. Evaluation : This stage though neglected, is crucial to the improvement of productive efficiency. A thorough analysis of all the factors influencing the production planning and control helps to identify the weak spots and the corrective action with respect to pre-planning and planning will be effected by a feedback. The success of this step depends on the communication, data and information gathering and analysis.

--S.C.Mishra

PURCHASING

Mission :

The mission of purchasing is to sense the competitive priorities necessary for each major product / service ( low production costs, fast and on-time deliveries, high quality products / services, and flexibility ) and to develop purchasing plans for each major product / service that are consistent with operations strategy.

Purchasing departments buy the raw materials, purchased parts, machinery, supplies, and all other goods and services used in production systems --- from paper clips to steel to computers.

Importance :

Several factors are increasing the importance of purchasing to-day : the tremendous impact of material costs on profits, the increasing prominence of automated manufacturing, the growth of business-to-business Internet transactions, and increasing global competition.

Purchasing must establish and maintain vendor relations to ensure that materials of the right design and of perfect quality are delivered in the right quantities at the right times. A number of material buying and selling auction-style web sites have recently been implemented for different industries.

The amount of annual expenditures for purchased materials is staggering. Yet purchasing department employees represent less than 1 percent of the total employees of organizations. A key organization function.

Purchasing engages in the following activities :

1. Maintain a database of available suppliers.

2. Select suppliers to supply each material.

3. Negotiate supply contracts with suppliers.

4. Acts as the interface between the company and its suppliers.

Purchasing Departments:

The manager of purchasing or the purchasing agent may report to the president, vice-president of materials , operations, plant manager, materials manager or anyone in between.

Organizations tend to go through cycles of centralization and decentralization, and purchasing has been caught up in these cycles. The tendency toward centralization of purchasing to-day is probably encouraged by the advances both in communication among plants and divisions of companies and in the information-processing capabilities of computers.

Among the advantages of centralization are :

§ Buying in larger quantities, which can mean better prices.

§ More clout with suppliers when materials are scarce, orders are delayed, or other supply difficulties are encountered. This clout translates into greater supply continuity.

§ Larger purchasing departments that can afford greater specialization of employees.

§ Combining small orders and thereby reducing duplication of orders, which can reduce costs.

§ Reduction of transportation costs by combining orders and shipping larger quantities.

§ Better overall control and consistency of financial transactions.

Advantages of decentralized buying :

1. Greater flexibility : the centralized buyer for a number of sites or divisions will find it difficult to react rapidly to changes in the requirements of individual users.

2. Close liaison : a local buyer will be in closer contact with his/ her own units and will be able to give greater assistance on the “window –on- the- world” duties.

3. Responsibility : the senior executive who has control of purchasing for a location can be held responsible for the purchase of goods, and the site remains autonomous in this respect.

Process of Acquiring Inputs :

Prodn. Control

Suppliers

Purchasing Department

Material Need Notice that Purchase Order has been placed Warehouse

Quotations Produce Goods

Schedule, Description, Drawing, Specification Notice that Acceptable Goods have been received.

Receiving Report

Goods Shipment Package

Invoice

Packing Slip

Receive & Inspect Goods

Purchase Order

Select Best Supplier

S2

S3

S1

Request for Quotations

Material Requisition

Figure. 1. Purchasing Process.

Basic Purchasing Instruments :

§ Material Specifications

§ Purchase Requisitions

§ Requests for Quotation

§ Purchase Orders

These instruments are fundamental to purchasing processes.

Duties of Purchasing :

1. Finding and approving suppliers

2. Purchasing at least total cost

3. Ensuring delivery at the right time

4. Warning of delays

5. Verifying invoices

6. Organizing all discussions with suppliers

7. Speculative buying

8. Advising on prices

9. Acting as a “window-on-the-world”.

Purchase Requisition:

The most common method of informing purchasing of material needs is through a purchase requisition. Users may also transmit their needs by phone, word-of-mouth, or through a computer-generated method. Although a variety of purchase requisition formats exist , every requisition should contain :

1. Description of required material or service

2. Quantity and Date required

3. Estimated unit cost

4. Operating account to be charged

5. Date of requisition ( this starts the tracking cycle )

6. Date required

7. Authorized signature.

The Purchase Order :

A contractual document, should contain the following informations.

1. Name and address of originating organization.

2. Name and address of receiving company.

3. Identifying number.

4. Quantity of produce or amount of service required.

5. A full description of the type, style, grade or other means of precise identification of the product or service.

6. The applicable issue of the product or service specification and any other relevant technical data (a reference to a published ,current specification may be used ).

7. Reference to any certification of conformity to requirements, which must accompany the delivered product.

8. Price agreed between purchaser and vendor.

9. Delivery agreed between purchaser and vendor.

10. Cost allocation – this for internal use .

11. Any delivery instructions.

12. Purchaser’s signature and standing in the organization.

13. Purchaser’s conditions of business.

Purchasing Cycle :

1. Identify or anticipate material or service needs

2. Evaluate potential supply sources

3. Select suppliers

4. Release and receive material requirements

5. Continuously measure and manage supplier performance.

TYPES OF PURCHASES :

Raw Materials

Semi-finished Products and Components

Finished Products

Maintenance, Repair and Operating Items.(MRO)

Production Support Items (Packing boxes,tape,wrappers )

Services

Capital Equipments

Question Bank

1. How can an effective purchasing department affect organizational performance ?

2. Describe how purchasing becomes aware of purchase requirements ?

3. What is the difference between a purchase order and a blanket purchase order ? What are the advantages of using blanket purchase orders ?

4. Assume you have been selected by management at your company to improve the purchasing process. Develop specific recommendations concerning how you would achieve a more efficient and effective process.

5. What is the mission of purchasing ? What factors are making purchasing more important to-day ? Explain. In what activities does purchasing engage ?

6. Define these terms : material specification, purchase requisition, request for quotation, purchase order.

7. Define make –or- buy analysis .

Lab.

1. UPS Worldwide Logistics provides third-party logistics management services to companies. Visit the web site of UPS at http://www.ups.com and find the web pages for UPS Worldwide Logistics. Describe some of the services that are offered.

2. Varsity Logistics (http://www.varsitynet.com) offers software products to help companies better manage their logistics. Visit and explore the company’s web site , and describe some of the software products offered.