OPERATIONS MANAGEMENT
SNO 1 2 3 4 5 6 7 8 9 10 11 12 TOPICS BASICS OF OPERATIONS MANAGEMENT KEY TERMS IN OPERATIONS MANAGEMENT FIVE GUIDING PRINCIPLES IN TQM OPERATIONS STRATEGY PRODUCT DESIGN AND PROCESS DESIGN AGGREGATE/CAPACITY PLANNING TYPES OF PRODUCTION FACTORY LOCATION FACTORY LAYOUT MATERIAL HANDLING PRODUCTIVITY BASICS OF JOB SCHEDULING
13 14 15 16 17 18 19 20
BASICS OF ERP BASICS OF PROJECT MANAGEMENT METHOD STUDY QUALITY CONTROL AND INSPECTION BASICS OF ISO 9000 BASICS OF ISO 14000 JOB SEQUENCING VALUE ENGINEERING AND VALUE ANALYSIS
BASICS OF OPERATIONS MANAGEMENT
Operations Management – Introduction Definition Production and Operations Management (“POM”) is about transformation of production and operational inputs into “outputs” that when distributed, meets the needs of customers. Operations Management is the systematic direction and control of processes that transform inputs into finished goods and services. It involves the responsibility of ensuring the business operations are efficient in terms of using as little resources as needed and effective in terms of meeting customer requirement.
INPUTS
TRANSFORMATION PROCESS
OUTPUTS
The process in the above diagram is often referred to as the “Conversion Process”. There are different methods of handling the conversion or production process-Job, Batch, Flow.
What is Operations Management? Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development and utilisation of resources that firms need to deliver the goods and services their clients wants. The purvey of OM ranges from strategic to tactical and operational levels. Representative strategic issues include determining the size and location of manufacturing plants, deciding the structure of service or telecommunications networks, and designing tecnology supply chains. Tactical issue include plant layout and structure, project management methods, and equipment selection and replacement. Operational issues include production scheduling and control, inventory, management, quality control and inspection, traffic and materials handling, and equipment maintenance policies.
Production of Goods vs. Services Key Differences
CHARACTERISTIC MANUFACTURING SERVICES
Output Customer contact Uniformity of input Labour content Uniformity of output Measurement of productivity Opportunity to correct quality problems Tangible Low High Low High Easy High Intangible High Low High Low Difficult Low
Scope of Operations Management Operations Management includes: ? Forecasting demand ? Deciding where to locate facilities ? Capacity planning ? Scheduling ? Managing inventories ? Assuring quality ? Motivating employees ? And many more……..
Operations Management Interfaces with Every Other Functional Area (Diagram from PPT)
OPERATIONS MANAGEMENT TASK: ADD VALUE (Diagram From PPT)
OPERATIONS MANAGEMENT-INTRODUCTION Definitions The terms production management and operations management are often interchanged. “Production” is directly related to the manufacturing of goods. In the world of services, production refers to the service delivery. “Operations” refers to the daily actions necessary for the system to work. A “Production System” is a system whose function is to transform an input into desired output by means of a process (the production process) and of resources. Resources
Input
Production Process
Output
Examples of Production Systems
Automobile Factory Input Output Process Resources Raw Material Complete cars Fabrication, Assembly Assembly line, Workers
Hospital Input Output Process Resources Patients Healthy Individuals Health care Medical Doctors, Nurses,Medical supplies, Equipment
KEY DECISIONS OF OPERATIONS MANAGERS ? What ? When ? Where ? How ? Who Designed Work to be done Needed / scheduled / ordered What resources / what amount
-
To do the work
Critical Decisions Made by Operational Managers ? Service and Product Design ? Quality Management ? Process and Capacity Design ? Location ? Layout Design ? Human Resources and Job Design ? Supply – Chain Management ? Inventory Planning, and JIT
New Challenges in OM From ? Local or national focus
? Batch shipments ? Low bid purchasing ? Lengthy product development ? Job specialization ? Standard products To ? Global focus
? Just – in – time ? Supply chain partnering ? Rapid product development, alliances
? Mass customization ? Empowered employees, teams
What Operations Managers Do
? Planning ? ? ? ? Organizing Staffing Leading Controlling
KEY TERMS IN OPERATIONS MANAGEMENT
1. Project Management – Planning, directing and controlling resources (people, equipment, material) to meet the technical cost and time constraints of a project. 2. Productivity – is the ratio of the input facilities to the output of goods and services. 3. Throughput time – the average time that it takes a unit to move through an entire process. 4. Throughput rate – the output rate that the process is expected to produce over a period of time. 5. Total Quality Management – managing the entire organization so that it excels on all dimensions of products and services that are important to the customer. 6. Six Sigma – a statistical term which measures how far a process varies from perfection. It provides techniques and tools to improve capability and reduce defects. It allows only 3.4 defects per million parts or service transaction. 7. PDCA Cycle – also called “ The Deming Cycle” refers to the plan-do-check-act cycle of continuous improvement. 8. Continuous improvement – the philosophy of continually seeking improvements in processes through the use of team efforts.
9.
Kaizen – Japanese term for continuous improvement.
10. Lean production – integrated activities designed to achieve high volume, high quality production using minimal inventories of raw material, work in process and finished goods. 11. Kanban – is scheduling system that tells us what to produce,whwn to produce and how to produce. It is system of continuous supply of component and parts such that workers have what they need, where they need and when they need. 12. Throughput – the rate at which money is generated by the system through sales (Goldratt’s definition). 13. Inventory – the money that the system has invested in purchasing things it intends to sell (Goldratt’s definition). 14. Operating Expenses – all the money that the system spends to turn inventory into throughput (Goldratt’s definition). 15. Value analysis / Value engineering – analysis with purpose of simplifying products & processes by achieving equivalent or better performance at a lower cost. 16. Order Qualifiers – Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase. 17. Order Winners – Characteristics of an organization's goods or services that cause it to be perceived as better than the competition. 18. Value analysis / Value Engineering – analysis with purpose of simplifying products & processes by achieving equivalent or better performance at a lower cost.
FIVE GUIDING PRINCIPLES IN TQM ? Results through processes ? Continuous improvement of processes ? Managing with facts ? Management establishing priorities ? Involvement of everyone through teamwork
When things go wrong, first ask what in the process broke down, not who did it.
OPERATIONS STRATEGY
Definition of Strategy Strategy relates to the overall action plans that determine the direction an organisation takes in pursuing its goals and objectives.
Definition of Operations Strategy A plan of action implemented by the firm that describes how they will employ their resources in the production of a product or service. An operational strategy is a necessary element for a business and supports the firm’s corporate strategy.
The six specific strategies are:
? ? ? ? ? ? Flexibility in design & volume Low price Delivery Quality After sales service A broad product line
Through these six specific strategies, operation managers can increase productivity and generate sustainable competitive advantage.
Business / Functional Strategy (Diagram from PPt)
Operation Strategy Formulation • How will operations support the organization’s strategies? ? ? ? ? ? Identify distinctive competencies Environmental scanning SWOT Identify Order qualifiers Identify Order winners
Refer Slides 28,29,30 for diagram
Examples of Distinctive Competencies Employed by Firms
Price Quality
Low cost High-performance design or high quality consistent quality
Nirma Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola Express Mail, Fedex, One-hour photo, UPS Burger King Supermarkets Disneyland Nordstroms Banks, ATMs
Time
Rapid delivery On-time delivery Variety Volume Superior customer service
Flexibility
Service
Location
Convenience
Operations Strategy at Wal-Mart Refer Diagram from PPT (32)
Clients look to Operations Strategy for help with these critical business issues: ? Cost efficiency and performance improvement ? ? ? ? ? ? ? ? Focus on company’s core business Increasing shareholders value Continuous process improvement Maintaining competitive edge Improving customer service quality Migration to new technology Product innovation management Merger synergy realization
PRODUCT DESIGN AND PROCESS DESIGN
Product Design can be defined as the idea generation, concept development, testing and manufacturing or implementation of a physical object or service. The development of a new product passes through eight distinct stages as shown in the figure below: Refer Diagram from slide no. 35
Process Design is concerned with the overall sequences of operations required to achieve the product specification. It specifies the type of work stations that are to be used, the machines and equipments necessary and the quantities in which each is required. The sequences of operations in the manufacturing process is determined by ? The nature of product
? ? ?
The materials used. The quantities being produced and The existing physical layout of the plant.
Major Factors affecting Process Design Decisions ? ? ? ? ? Nature of product/service demand. Degree of vertical integration. Product/service and volume flexibility. Degree of automation. Level of product/service quality
Refer Diagram from slide no. 37
AGGRREGATE / CAPACITY PLANNING
Aggregate planning involves planning: ? The best quantity to produce during time periods in the intermediate-range horizon (often 3 months to 1 year). ? The lowest cost method of providing the adjustable capacity to accommodate the production requirements. ? Workforce size, production rate (work hours per week) and inventory levels. Objectives of Aggregate Planning To develop plans that are: ? Feasible: The plans should provide for the portion of demand that the firm intends to meet and should be within financial and physical capacity of the firm. Optimal: The firm should aim for plans which will ensure that resources are used as wisely as possible and cost kept as low as possible.
?
? To increase the range of alternatives of capacity use, that can be considered by the management of the firm.
Operations Planning and Scheduling System This system is concerned with the volume and timing of outputs, the utilization of operations capacity and balancing outputs with capacity at the desired levels of competitive effectiveness.
Aggregate Output Planning It is the process of determining output levels (units) of product groups over the next 6 to 18 months period on a weekly or monthly basis. The plan indicates the overall level of output supporting the business plan. Aggregate Capacity Planning It is the process of devising plan for providing a production capacity scheme to support the intermediate range sales forecast. Refer Diagram from slide no. 44
In developing an intermediate aggregate capacity plan, the variables that may be manipulated to vary the production capacity from month to month are: ? The size of workforce. ? The use of overtime or idle time ? The use of inventories or back orders ? The use of sub-contractors ? The approval of design and drawings
Cost associated with Aggregate planning ? Pay roll cost
? Cost of overtime, second shift and subcontracting. ? Cost of hiring and laying off workers. ? Cost of excess inventory and backlog. ? Cost of production rate changes
Types of Capacity Fixed capacity: The capital assets (buildings and equipments) at a particular time are known as the fixed capacity. Adjustable capacity: It is on and the size of the workforce, the numbers of hours per week they work, the number of shifts and extent of sub-contracting. Design capacity: it is the planned rate of output of goods and services under normal operating conditions, It is also known as installed capacity. System capacity: it is the maximum output of a specific product or product- mix that the system of workers and machines is capable of producing. Potential capacity: it is that capacity which can be made available within the decision horizon of the top management. Effective capacity: It is the capacity which is used within the current budget period. It is also known as practical capacity or operating capacity. Actual capacity: This is actual output achieved during a particular time period.
The figure given below illustrates the relationship between design capacity, system capacity and actual output. Design capacity
System capacity
Actual output
Measurement of Capacity Capacity may be measured in terms of inputs or outputs of the conversion process, Some of the examples of common measures of capacity are given below: Organization Automobile factory Steel mill steel Power plant Brewery Airline Hospital University Measures of capacity No of vehicles Tons of Megawatts of electricity generated Barrels of beer No of seats No of beds No of students Input rate capacities Output rate capacities
Capacity Decisions Major considerations in capacity decisions are: ? What size of plant? How much capacity to install? ? When capacity is needed? When to phase-in capacity oe phase-out capacity? ? At what cost? How much budget for the cost? Determination of Capacity Capacity determination is a strategic decision in factory planning. Capacity decisions are important because: ? They have a long term impact ? Capacity determines selection of appropriate technology, type of labor and equipments, etc. ? Right capacity ensures commercial viability of the business venture. ? Capacity influences the competitiveness of a firm.
Factors affecting determination of Plant Capacity ? Market demand for a product/service. ? The amount of capital that can be invested. ? Degree of automation desired. ? Level of integration (i.e. vertical integration). ? Type of technology selected ? Dynamic nature of factors affecting determination of plant capacity, viz; changes in product design, process technology, market conditions and product life cycle, etc. ? Difficulty in forecasting future demand and future technology. ? Obsolescence of product and technology over a period of time. ? Present and future demand. ? Flexibility for capacity additions.
TYPES OF PRODUCTION Refer diagram on slide no. 53
Intermittent production
Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). In the intermittent production, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible.
Following chart highlights the concept of an intermittent production system.
Customer’s Order & Customer’s Specific
Intermittent Production
Following are examples on the intermittent production. Please refer above chart while reading examples given below. 1. The work of a goldsmith is purely based on the frequency of his customer's orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. Here, ornaments are not done on a continuous basis. 2. Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis.
The features of an intermittent production are depicted below
Features of Intermittent Production
1. Flow of Production is not Continuous 2. Variety of Products are Produced 3. Volume of Production is Small 4. General Purpose Machines are used 5. Sequence of Operation changes as per Design
The characteristics of an intermittent production system are listed as follows: 1. The flow of production is not continuous. It is intermittent. 2. Wide varieties of products are produced. 3. The volume of production is small. 4. General purpose machines are used. These machines can be used to produce different types of products. 5. The sequence of operation goes on changing as per the design of the product. 6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.
Continuous production
Continuous means something that operates constantly without any irregularities or frequent halts. In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence.
Following chart highlights the concept of a continuous production system.
Following are examples on the continuous production system. Please refer above chart while reading examples given below. 1. The production of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production. 2. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand. 3. Other examples – Chemical Industry, Automatic Industry
The features of a continuous production system are depicted below.
Features of Intermittent Production 1. Flow of Production is Continuous & not intermittent 2. Products are Standardized 3. Products are produced as per Quality Standards 4. Products are produced in Anticipation of Demand 5. Standardized routing sheets and schedule are prepared
The characteristics of a continuous production system are listed as follows: 1. The flow of production is continuous. It is not intermittent. 2. The products are standardized. 3. The products are produced on predetermined quality standards. 4. The products are produced in anticipation of demand. 5. Standardized routing sheets and schedules are prepared.
Depending upon the scale of production and the kind of product, the production can be classified as: 1. Piece or job lot production, 2. Batch or medium size production and 3. Mass (or bulk) production. This classification is important, because depending upon the scale of production, different manufacturing strategies are adopted by plant managers for efficient production.
FACTORY LOCATION
Introduction ? The prime criterion for a preferred location is the least total cost, the minimum delivered-tocustomer cost of the product or service. The location of factory may well have a substantial effect upon the operation of the unit and on the factories within a geographical region. No set of rules can be laid down whereby the solution to the problem of location can be solved or programmed. There are, however, a number of factors, such as raw material availability, labour costs, and so on, which should be considered and these factors will be discussed in detail later. ? A plant location problem is not encountered everyday, but the factors that can create a problem are constantly developing. Technological improvements make existing products noncompetitive. New products replace established lines. A requirement for different materials or a change in the source of materials alters supply costs, power, water or other resource needs are subject to production levels which in turn are a function of demand. Any or all of these factors can force a firm to question whether its plant should be altered at the present location or moved to another locality. ? It is worth differentiating between the problem of location and of site. The location is the general area and the site is the place chosen within the location. The decision on site thus probably proceeds in two stages: in the first stage the general area is chosen and then a detailed survey of that area is carried out to find possible site. ? Thus, a study to identify the best location typically starts with an evaluation of regional factors and progresses to particular communities within the favored region. Information of a general nature suffices to rate regions. They are compared with respect to market proximity, raw material, tax rates, and other characteristics of special interest to the organization seeking the site. The factors affecting the choice of a community and a particular site within the community involve specific details.
? The models given here for factory location can be used for both the selection of a location and also for the selection of a site in a particular location. The selection of a site decision is probably made by taking into account the more detailed factors than considered for selection of a location (……. is the view pleasant? ……. is there a good restaurant nearby?…….).
Factors affecting location
The following are some of the factors which will influence the choice of location –either for a new construction site or for an available building shed. 1. Integration with other group companies
If the new factory is one of a number of factories owned or operated by a single group of companies, the new factory should be situated such that its work can be integrated with the work of associated factories or warehouses. This will require that the group should be considered as an entity, not as a number of independent units. (There is a high possibility of using the linear programming model for such factory locations.) 2. Availability of transport
In some cases, where products or purchased parts are heavy and bulky, it is important that goods transport facilities shall be readily available. Goods intended largely for export indicate a location near a seaport or a large airfield. Years ago industrial growth began in seaports because of reliance on inexpensive ocean traffic. As the railroad network grew, the relationship of raw materials to manufacturing to markets became more flexible. Air and trucking transportation encouraged further versatility and industrial centers spread throughout the land. The distance in time between supply and demand is ever diminishing. 3. Availability of materials While it is true that good transport facilities will enable goods to be obtained and delivered readily, a location near main suppliers will help to reduce cost and permit staff to go readily to see suppliers to discuss technical or delivery problems. Any buyer who has tried to improve deliveries from an inaccessible supplier will bear witness to the considerable difficulties involved.
4. Availability of services There are six main services that need to be considered, namely – a) Gas b) Electricity c) Water d) Drainage e) Disposal of waste f) Telephone
Certain industries use considerable quantities of water for food preparation, laundries, metal plating, etc. Others use a great deal of electricity for chemical processing and so on. An assessment must be made of the requirements of the factory for as far ahead as possible. Underestimating the needs of any of the services can prove to be extremely costly and inconvenient. 5. Suitability of land and climate
Here, not merely must the genealogy of the area be considered, that is, whether the subsoil can support the loads likely to be placed on it, but also whether the climatic conditions (humidity, temperature and atmosphere) will adversely affect the manufacture. Modern building techniques are such that almost all disadvantages of terrain and climate can be overcome, but the cost of so doing may be high and a different locality could avoid an inflated first cost. 6. Site cost
As a first cost, the site cost is important, although it is important not to let immediate gain jeopardize long term plans. 7. Availability of amenities
A location which provides good amenities outside the factory – shore, theatres, cinemas, restaurants – is often much more attractive to staff than one which is more remote. This is particularly so where a large proportion of married women are employed who find it convenient to shop for the family during the lunch-break and on the way home. One important amenity in this connection is good personnel transport buses and trains; and some companies find this so vital that they provide special company buses. Other amenities such as good canteen, co-operative stores, child-care are also important. 8. Availability of labour
Labour may be more readily available in some cases than in others. The Department of Trade & Industry can provide information on this point. Certain areas, however, have traditional skills. For example, woollen products in Punjab and coir products in Kerala. It is very rate today that a location can be found which has appropriate skilled labour both readily available. (Big cities, however, could be excluded from this generalization.) The choice has to be made between a location where skilled men
exist but are not readily available and where there is a supply of unskilled labour. It must be remembered that new skills can be taught, processes simplified and made less exacting and key personnel moved. The importance of labour depends, of course, on the particular firm, its policies and its products. If the firm is science-oriented, it should anticipate going to an area where engineers and scientists congregate because it is unlikely that many can be lured to remote sections. 9. Labour stability Thorough precautions to assure low production costs are of no avail unless the proposed new labour laws and regulations can operate with continuity and tranquil labour-management relations. More than one company has been forced out of business because of unreasonable or prohibitive labour demands. Wage increases and jurisdictional disputes continue to be important points of conflict. The question of labour stability must be approached from a positive standpoint. There are certain strong points of community attitude that should influence its selection. Perhaps, the most crucial question that can be asked about a community is “What is its past history?” 10. Availability of housing Where staff has to be recruited other than locally, housing will need to be available. It is general experience that the offer of good housing can be of greater assistance in attracting staff than almost any other factor. 11. Local building and planning regulations It is important to check at an early stage that the proposed location does not infringe any local regulations. A discussion with the surveyor’s department of the local authority is most desirable. Compliance with pollution standards is a recent location constraint for heavy users of air and motor resources. Reliable fuel and raw material supplies may become critical factors in the future. 12. Room for expansion It is most unwise to build a factory to the limit of any site. Adequate room for genuine expansion should be allowed. It is dangerous to assume that at a later date the car park can be built on or that the canteen can be used as a productive area. 13. Safety requirements Some factories may present, or may be believed to present, potential dangers to the surrounding neighbourhood; for example, nuclear power stations and explosive factories are often considered dangerous. Location of such plants in remote areas may be desirable or locating at a safe distance from such factories would be advisable. 14. Adequacy of circulation
The movement of goods, visitors and staff to and from a factory presents a problem not only of easy access but also easy control. There is also a need for emergency access – fire fighting equipment or ambulances – which if impeded could endanger life and seriously affect the company. 15. Political situation The political situation in potential locations should be considered. 16. Special grants Government and local authorities often offer special grants, low interest loans, low rentals and other inducements in the hope of attracting industry to particular locations. As these are often areas with large reservoirs of labour, these offers can be most attractive. Every State in India has got different bodies that advise on product selection and plant location. In Maharashtra, these are: SICOM, MIDC, MSSIDC and SISI. 17. Taxation Few industries have relocated their plants solely because of unfavourable State taxes. It is rather the cumulative effect of this factor and other high cost factors that may prompt a manufacturer to consider relocation. 18. Availability of car space There is no doubt that the use of cars as a means of transport to and from work will increase, whatever public transport facilities are provided. If open space is not available for car parking, special car-park structures may be necessary. It is difficult to satisfy all the above factors for plant location. However, a compromise between what is wanted and what can obtained may be the only solution.
1. 2. 3. 4. 5. 6. 7. 8.
Integration with other group companies Availability of transport Availability of materials. Availability of services. Suitability of land and climate. Site cost. Availability of amenities. Availability of labour.
9.
Labour stability.
10. Availability of housing. 11. Local building and planning regulations. 12. Room for expansion. 13. Safety requirements. 14. Adequacy of circulation. 15. Political situation. 16. Special grants. 17. Taxation. 18. Availability of car space
FACTORY LAYOUT
? Introduction The disposition of the various parts of a plant, along with all the equipment used therein, is known as the Plant Layout, which should be designed to enable the plant to function most effectively. Plant Layout is a companion problem to Plant Location. A decision to relocate provides an opportunity to improve total facilities and services. A decision not to relocate is often accompanied by plans to revise the current plant arrangement. The re-layout must be designed to reduce increasing production costs that gradually evolve from piecemeal expansion or to introduce an entirely new process. In either case, the re-layout strives to maximize production flow and labour effectiveness. In this section, we shall explore the relationship of production departments – grouping of production activities – rather than individual machines or architectural features. A facility layout of a hospital would concern emergency rooms, operating theatres, patient rooms and even the parking lot, but it would not initially involve the location of an x-ray machine or a cash register. However, the detailed equipment or facilities layout would follow the same methodology as the overall departmental layout. ? Objectives of Plant Layout The chief objectives are likely to be improved operations, increased output, reduced costs, better services to customers, and convenience and satisfaction for company personnel.
? Types of Plant Layout • There is a layout by fixed position or by fixed material location. This is a layout where the material or major component remains in a fixed place. All tools, machinery, men and other pieces of material are brought to the major component. The complete job is done or the product is made with the major component staying in one location. Ship-building and heavy construction of dams, bridges and buildings are typical examples. Advantages are: Handling of major assembly unit is reduced. Highly skilled operators are allowed to complete their work at one point and responsibility for quality is fixed on one person or assembly crew. Frequent changes in products or product design and in sequence of operations are possible. The arrangement is adapted to a variety of products and intermittent demands. It is more flexible in that it does not require highly organized or expensive layout engineering, production planning or provisions against breaks in work continuity. The disadvantage is that the required movement of materials and machines may be cumbersome and costly. ? Product, Flow, Sequential or Line Layout • Here the Plant is laid out according to the requirements of the product. This is typical of flow production. One product or one type of product is produced in one area. But unlike layout by fixed position the material moves. This layout places one operation immediately adjacent to the next. It means that any equipment used to make the product, regardless of the process it performs, is arranged according to the sequence operations. Diametrically, this is illustrated in Figure 1, where Product 1 goes first to machine-A, then to machine-B, then to machine-C, these machines being used exclusively.
• •
• •
•
for Product 1, Product 2 and Product 3 have their own line of machines (K,L,M, and R,S,T) and, even though machines A,K,R are identical and interchangeable, work is not transferred from one product line to another. Advantages are: 1. Reduced handling of material. 2. Reduced amounts of material-in-process, allowing reduced production time and lower investment in materials. 3. More effective use of labour (a) through greater job specialization and (b) through ease of training. 4. Easier control of production allowing less paperwork and effective supervision. 5. Reduced congestion of floor space otherwise allotted to aisles and storage.
Disadvantages are: 1. Unless volume is very high, machine utilization may be low, with a subsequent high capital investment. 2. One machine breakdown may immobilize a complete production line. 3. The system is inflexible, being unable to accommodate changes. 4. Unless the production is true flow production and all operations balanced, buffer stock (workin-process) will be inevitable. 5. The pace of the line is set by the slowest operation. 6. Any changes in product design, volume, etc., in the line will normally require a major investment.
? Process of Functional Layout In this type of layout, plant is grouped according to its function. Thus, all drilling machines will be together, as will all milling machines, presses, lathes and so on. This is most commonly met with in jobbing product. This is illustrated in figure, where products 1, 2 and 3 all go to machine-A, then after processing, product 1 goes to machine-B and thence to machine-C, while products 2 and 3 go to machine-L. Product 2 then goes to machine-C, while product 3 goes to machine-T. To allow all machines to be fully loaded, work-in-progress stores are necessary between each machine.
Advantages are: 1. 2. 3. 4. 5. Better machine utilization allows lower machine investment. It is adapted to a variety of products and to frequent changes in sequence of operations. It is adapted to intermittent demand (varying production schedules). The incentive for individual workers to raise the level of their performance is greater. It is easier to maintain continuity of production in the event of – (a) machine or equipment breakdown; (b) shortages of material; (c) absent workers
Disadvantages are: 1. 2. Substantial pre-production planning is required if machine loading is to be high. Control is difficult.
3. Buffer stocks are essential; hence, relatively high investment in raw materials and work-inprogress. 4. 5. It increases handling, space requirements and production time. Close supervision is essential.
Which type of layout to use? Use layout by fixed position or fixed material location when – 1. Material forming or treating operations require only hand tools or simple machines. 2. Making only one or a few pieces of an item. 3. The cost of moving the major piece of material is high. 4. The skill of workmanship lies in the abilities of the workers or it is desired to fix responsibility for product quality on one worker or crew.
Use layout by product when – 1. There is a large quantity of pieces or products to make. 2. The design of the product is more or less standardized. 3. The demand for it is fairly steady. 4. Balanced operations and continuity of material flow can be maintained without difficulty.
Use layout by process when – 1. Machinery is highly expensive and not easily moved. 2. Making a variety of products. 3. There are wise variations in times required for different operations. 4. There is a small or intermittent demand for the product. In actual practice, most layouts are a combination of the basic layouts discussed above. They are made to utilize the advantage of all three types of layout.
Criteria for a good layout While the techniques employed in making a layout are normal work-study techniques, the process is a creative one which cannot be set down with any finality, and one in which experience plays a very great part. Furthermore, it is not possible to define a good layout with any precision. However, there are certain criteria which will be satisfied by a good layout, and these are discussed below:
1.
Maximum Flexibility
A good layout will be one which can be rapidly modified to meet changing circumstances. In this context, particular attention should be paid to supply points, which should be ample and of easy access. These can be simply and cheaply provided at the outset of a layout, and failure to do so can often present very necessary modifications to unsatisfactory, outdated or inadequate layouts.
2.
Maximum Coordination
Entry into, and disposal from, any department should be in such a manner that it is most convenient to the issuing or receiving departments. Layout requires to be considered as a whole and not parochially. 3. Maximum use of Volume
A factory must be considered as a cubic device, as there is airspace above the floor area. Maximum use should be made of the volume available. Conveyors can be run above lead height and used as moving work-in-progress stores, or tools and equipment can be suspended from the ceiling. This principle is particularly true in stores, where goods can be stacked at considerable heights without inconvenience 4. Maximum Visibility
All men and materials should be readily observable at all times; there should be no “hiding places” into which goods can get mislaid. This criterion is sometimes difficult to fulfill, particularly when an existing plant is taken over. Every piece of partitioning or screening should be scrutinized most carefully while introducing undesirable segregation and reducing effective floor space.
5.
Maximum Accessibility
All servicing and maintenance points should be readily accessible. For example, a machine should not be placed against a wall in such a manner that a grease-gun cannot reach the grease nipples. The maintenance under these circumstances is likely to be skimped at best and will occupy excessive time. Similarly, a piece of plant in front of a fuse box will impede the work of the electricians and may
cause unnecessary stoppage of the machine when the fuse box is opened. If it is impossible to avoid obscuring a serviced point, then the equipment concerned should be capable of being moved. It should not be a permanent installation. 6. Minimum Distance
All movements should be both necessary and direct. Handling material adds to the cost of the product but does not increase its value. Consequently, any unnecessary or circuitous movements should be avoided. It is a common failing for material to be moved off a work-bench to a temporary storage point. This intermediate rest place is often unnecessary and unplanned, being used only because an empty space appears convenient. The providing of ‘extra’ shelves, benches and tables should be questioned very thoroughly and avoided if possible. 7. Minimum Handling
The best handling is no handling, but where handling is unavoidable it should be reduced to a minimum by the use of conveyors, lifts, chutes, hoists and trucks. Material being worked on should be kept at working height and never placed on the floor if it is to be lifted later. 8. Minimum Discomfort
Poor lighting, excessive sunlight, heat, noise, vibrations and odour should be minimized and if possible counteracted. Apparently, trivial discomforts often generate troubles greatly out of proportion to the discomfort itself. Attention paid to the lighting and general decoration and furniture can be rewarding without being costly. Recommendations on the intensity of lighting for various tasks are published and most manufacturers of lighting equipment will provide useful advise on the subject. 9. Inherent Safety
All layouts should be inherently safe, and no person should be exposed to danger. Care must be taken not only of the persons operating the equipment but also of the passers-by, who may be required to go behind a machine, the back of which is unguarded. Adequate medical facilities and services must be provided, and these must satisfy the Chief Inspector of Factories. Experience shows that the factory inspector is not only most competent to advise on these matters, he is always ready to be of assistance. 10. Maximum Security
Safeguards against fire, moisture, theft and general deterioration should be provided, as far as possible, in the original layout.
11.
Unidirectional Flow
Work lanes and transport lanes must not cross. At every point in a factory, material must flow in one direction only, and a layout which does not conform to this will result in considerable difficulties, if not downright chaos, and should be avoided. 12. Visible Routes:
Definite lines of travel should be provided and, if possible, clearly marked. No gangways should ever be used for storage purposes, even temporarily. The co-existence of a large number of criteria makes the definition of an “optimum” schedule virtually impossible. Furthermore, the writing of a computer programme for plant layout becomes a task of considerable difficulty unless some very drastic simplifications are made. ` 1. 3. 5. 7. 9. Maximum Flexibility Maximum Use of Volume Maximum Accessibility Minimum Handling Inherent Safety 2. 4. 6. 8. Maximum Coordination Maximum Visibility Minimum Distance Minimum Discomfort
10. Maximum Security 12. Visible Routes
11. Unidirectional Flow
Advantages of a good Layout A layout satisfying the above conditions will have the following advantages over one which does not: 1. The overall process time and cost will be minimized by reducing unnecessary handling and by generally increasing the effectiveness of all work. 2. Labour supervision and production control will be simplified by the elimination of hidden corners in which both men and materials can be misplaced. 3. Changes in programme will be most readily accommodated.
4. Total output from a given plant will be as high as possible by making the maximum effective use of available space. 5. 6. A feeling of unity amongst employees will be encouraged by avoiding unnecessary segregation. Quality of products will be sustained by safer and better methods of production.
Symptoms of a poor Layout The main symptoms of a poor layout are: 1. Lack of control. 2. Congestion of men and materials. 3. Excessive re-handling. 4. Long transportation lines. 5. Frequent accidents. 6. Low worker performance.
MATERIAL HANDLING
Material handling may be broadly defined as the movements of materials from one place to another. It may be picking up or putting down, moving horizontally or vertically or in any inclined plans of materials, of any kind in their raw, semi-finished or finished state. ? OBJECTIVE • Material handling often does not add anything to the value of the product but only increases the cost. Handling costs constitute a substantial portion of the total cost of production. Besides, material handling is also found to be responsible for a large percentage of product damage. 80 to 90% of industrial accidents and other disadvantages. In spite of this, material handling is an essential feature of industrial activity. Materials have to be moved from one place to another without which all the activities would come to a standstill. Material handling often accounts for improved utilization of men and machines, and provides for specialization of skills and the related advantages. Since material handling cannot be eliminated completely in any organisation, the objective of material handling may be stated as instituting an efficient system of handling. Eliminating unnecessary and wasteful handling system saves money and time, reduces damage to materials and makes the work safer. Some Principles Some of the major principles in the design of an efficient system of material handling are: a) Reduce handling to a minimum: As far as possible, materials should always move towards completion, over the shortest distance without back-tracking. A large amount of handling can be
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eliminated by planning the location of operations so that one operation finishes right where the next begins. The flow of product should receive top priority in planning of layout.
b) Avoid re-handling: It may not be possible to eliminate re-handling completely. Nevertheless, rehandling is a wasteful and costly operation. Re-handling can be reduced by (i) not keeping anything on floor, (ii) avoiding transfers from floor to container or vice versa or from container to container, and (iii) avoiding making of materials. c) Combine handling with other operations: Many times, handling may be made a productive activity by combining with other operations, such as production, inspection and storage. In process industries, materials undergo physical and chemical changes while in movement, handling devices may be used as live storage of materials may be sorted and inspected while they are being handled d) Ensure safety in handling: Safety is a key word in handling. A large percentage of industrial accidents are attributed to poor handling practices. Even costlier in terms of money is the damage to equipment and products due to improper handling methods. A good handling system should ensure safety to workers and materials. Manual handling of heavy objects, materials scattered on the floor or projecting into aisles are but a few causes of accidents. Keeping gangways and aisles clear is one of the primary precautions against accidents in handling. e) Handle materials in unit loads: It is easier and quicker to move a number of materials at a unit rather than piece by piece. Modern material handling devices are designed to take advantage of unutilized loads. f) Use gravity where possible and mechanical means, if necessary: The simplest and cheapest way to handle materials is by using gravity. Often chutes and inclined boards can be conveniently used to transport materials quickly to the point of use without much investment on costly handling equipment. Where it is not possible to use gravity for various practical reasons, some mechanical means should be considered. Lifting and carrying of heavy materials mechanically saves time and reduces fatigue of workers. g) Select proper handling equipment: There are as many types of handling equipment available today as the number of materials to be handled. And any single equipment may not solve all handling problems. It is therefore necessary to choose the equipment suitable for the job under consideration. The equipment selection needs to be done carefully so that there is an efficient coordination of all handling, resulting in overall economy. Use of standardized equipment facilitates maintenance and repair. Another important factor in the selection of equipment is flexibility. Industrial activity is subject to constant changes and handling equipment should provide for this change. In other words, the equipment selected should be capable of a variety of uses and applications.
h) Reduce terminal time of equipment: The advantage of mechanical and power equipment would be lost of they are made to wait during loading and unloading which may take considerable amount of time. By reducing this waiting time the handling equipment would be released for more productive work. There are various mechanical devices like trailers, tipping arrangements, cranes and hoist arrangements, to quicker loading and unloading operations i) Buy equipment for overall savings:
In selecting equipment, savings in overall handling cost must be the guiding principle rather than the first cost of equipment. Arriving at the handling cost is a difficult problem but a fairly accurate estimate can be obtained by determining the handling elements and applying work measurement. In India, labour is still comparatively less costly and a longer period may have to be allowed for amortizing the handling equipment. All direct and indirect savings are to be taken into consideration while deciding on handling equipment. j) Use labour consistent with handling jobs:
Manual handling could be done by unskilled labour, whereas mechanical handling may require semi-skilled or skilled workers. Proper allocation of skills helps in overall economy. As far as possible, direct production operators should not be used for handling operations. It is preferable to have a separate gang of material handlers to ensure proper utilization of production workers. k) Train workers and maintain equipment:
Careful operation and proper upkeep are essential for getting the maximum out of the handling equipment. Careful selection and training of employees in principles, operation and safety rules and planned maintenance of equipment are worthwhile investments in the long run.
? Material Handling Equipment:
A pre-requisite to the design of a material handling system is a knowledge of the different kinds and types of material handling equipment that are available. Although there are hundreds of different handling equipment, all can be placed in three major categories. ? Conveyors: The first major class of material handling equipment consists of conveyors. A conveyor is any device which moves material in either a vertical or horizontal directions between two fixed points, and this movement can take place either continuously or intermittently.
One of the distinct characteristics of conveyors is that they create a relatively fixed route. Consequently, they are employed primarily in continuous manufacturing in which materials leaving one work station invariably go to some other specific work station in the production line. Therefore, it is possible to connect two such work stations by material handling equipment which is capable of moving materials only between two fixed points. In intermittent manufacturing, however, materials leaving one work station may go to any number of other work stations. Obviously, it would not be feasible to set up a network of conveyors which would provide all the possible route which materials may have to follow. A second characteristic of conveyors is that, unless they are of the portable type, they occupy space continuously. As a result, they must be installed in locations in which they will not interfere with the flow of other traffic. For example, if two work stations are located on opposite sides of an aisle which is used as a path of travel by men and trucks, a floor mounted conveyor could not be used to link these two work stations. Therefore, unless cross traffic can be bypassed, no serious consideration would be given to the use of conveyors.
In so far as listing of different types of conveyors is concerned, the ones most frequently encountered are the following: • Gravity Conveyor: As the name implies, gravity conveyors rely on nature for their driving force. Roller, wheel and chute conveyors call in this category. They are used primarily to move materials and are a relatively inexpensive type of conveyor as a rule, although for some applications, such as in moving grain, they can be quite expensive. Compared with other types, gravity conveyors are highly flexible and transportable and are well suited to variable paths. Movement is restricted, however, to route that involves some degree of vertical fall. Endless chain conveyors: These conveyors are usually driven by an electric motor and, as a consequence, are usually more expensive than gravity conveyors. They have several important advantages, however. These conveyors can move materials up as well as down, and the progress of the materials can be closely controlled. In addition, special carrying devices and containers can be attached to the chain. Frequently, production tasks such as dip painting, cleaning and washing may be performed as the conveyor moves. Finally, by varying the speed of the conveyor at different points, or by building loops into it, work-in-process inventory may be stored between operating stages. Belt conveyors: Belt conveyors are also driven by electric motors. These belts are usually made of some flexible material such as rubber. However, special belts are used in many industries. In the baking industry, for example, Teflon-coated metal is utilized to prevent sticking. The belt passes over rollers, which normally create a trough in the centre of the belt where the materials are concentrated. Conveyors of this sort are used mainly for transporting bulky material. Baggage is moved from the ground to the baggage compartments of airplanes and shipped by conveyor belts. They are also used to move ores from the min face to work areas. Stock brokerage firms and insurance companies even use them to route papers to various parts of
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their buildings. When work is to be performed, however, the materials must be taken from the belt and later replaced when the work is completed. • Other conveyor equipment: Pipelines are often employed for moving liquids and gases such as gasoline and natural gas. Pneumatic tubes are used in some firms for rapid dissemination of internal communications.
Screw conveyors have been successfully used to lift materials in both grain elevators and foodprocessing industry to move delicate foods in steady streams without damage. ? Industrial trucks: Industrial trucks which represent the second category of material handling equipment, are vehicles powered by hand, fuel or electricity, which are capable of transporting materials horizontally between any two points. As opposed to a conveyor, a truck is able to more from one location to any other location so long as suitable traveling surface is available and its path of travel is not obstructed. For this reason, the prevalent method of handling material in a firm engaged in intermittent manufacturing is by means of trucks. The variable path of travel they are able to follow permits them to transport materials from one work station to any of a number of other work stations at which a subsequent operation is scheduled to be performed. A second desirable feature of trucks is that they occupy a given amount of space intermittently. This means that a certain amount of space in a given location is required to house a truck for only as long as the truck is in that location. As soon as the vehicle is moved, the space is free for other uses. As in the case of conveyors, there are many types of trucks, and each of these can be equipped with a variety of attachments. But the most important ones are as follows: Hand operated vehicles, tractors, platform trucks, forklift trucks, straddle carriers. When the loads are not too heavy and the hauls are short, manual equipment may be used. However, when the load size and weight and the distances to be traveled are great, powered equipment is used. Today, most industrial trucks are powered. They are generally equipped with forks or platforms that can be raised or lowered to facilitate the movement and storage of materials, and for this reason the loads are generally placed on pallets or skids. ? Cranes and hoists: The third classification of material handling equipment consists of cranes and hoists. This equipment is able to move materials vertically and laterally in any area of limited length, width and height. It is used primarily when material must be lifted prior to being moved from one point to another. These points may represent different work stations or different locations at a single work station. For example, if a part is large or heavy, the operator may find it necessary to use a hoist to aid him in
loading or unloading the machine. Subsequently, a crane may be used to move the part to another work-station. One of the advantages of cranes and hoists is that they are able to transport objects through the overhead space in the plant. Consequently, space is utilized, which would otherwise be unused, and floor space is freed for other uses. To illustrate, it might be possible to move a large heavy casting by means of a truck from one work-station to another. However, this would create a need for wide aisles at appropriate locations in the plant. If a floor space is at a premium, a more desirable alternative would be to transport the item through the air by means of a crane which would either eliminate the need for certain aisles or, at least, permit the use of aisles which may be required for the movement of smaller objects. But there are cases in which cranes and hoists are used, not because they free floor space but because they are the best available means of positioning material in a particular location. However, when considering cranes and hoists, it is important to keep in mind that any one unit of this equipment is capable of serving on a limited area.The size and shape of this area will vary with the kind of crane or hoist being used. Nevertheless, the equipment is somewhat more flexible in this respect than are conveyors, but not a flexible as are industrial trucks. Also, it will be found that cranes and hoists are as likely to be used intermittently as in continuous production. Again, there are many types of equipment which are placed in the crane and hoist category. However, the most common ones are the following: overhead bridge cranes, gantry cranes, jib cranes, elevators, lifts, chain hoists, air hoists, electric hoists. Overhead bridge crane are commonly employed in factories where large, heavy pieces of equipment such as electrical transformers, generators and power regulators are manufactured. These cranes ride on parallel overhead rails and are usually designed so that they can service any place in the work area of the plant. Another common type of crane, which is designed for outside work, is the gantry crane. It moves in limited areas on wheels, providing its own superstructure, and is chiefly used for such tasks on moving lumber and loading and unloading in railroad freight yards. Large cranes of this sort must be disassembled if they are to be moved from one location to another. This is their main limitation. Elevators and lifts are used to raise everything from materials to workers. Since moving materials on this type of equipment is quite costly, the modern trend is to construct one storey plants, thus eliminating the need to raise and lower material between floors.
PRODUCTIVITY
Productivity is a measure of how much input is required to produce a given output, i.e., it is the ratio of output to input.
Factors affecting productivity ? Technology employed. ? Tools and raw materials used. ? Organization structure. ? Planning and scheduling of work. ? Plant layout. ? Innovations. ? Personnel policies. ? Work environment. ? Materials management. ? Skills of the workforce. ? Health, attitude towards workers, staff. ? Continuous training to the workers and staff. ? Proper maintenance of machines. ? Management Union relationship. ? Morale of the employees. ? Discipline. ? Transport and canteen facilities.
Techniques to improve productivity • • • • • Better planning and training of employees. Use of time and motion studies to study and improve work performance. Better transportation and material handling system. Providing work incentives and other benefits to workers. Involvement of workers in decision-making.
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Improvement in technology of production process. Simplification, standardization and specialization techniques like PERT, CPM. Better and efficient utilization of resources. Use of linear programming and other quantitative techniques. ABC analysis to identify more important items and then apply inventory control to reduce capital investments.
Measurement of productivity
1) Labour productivity =
amount of output
amount of labour
2) Capital productivity
=
sales turnover capital employed
3) Profit productivity
=
profit investment
BASICS OF JOB SCHEDULING
Detailed day-to-day planning of operations is called job scheduling. It deals with questions such as: ? Which work centers will do which job? ? When should an operation/job be started? When should it end? ? On which equipment should it be done, and by whom?
? What is the sequence in which jobs/operations need to be handled in a facility or on an equipment? The job-shop type of production system is more concerned with day-to-day planning. There would be a variety of jobs. Each job has a variety of operations to be performed. The variety of jobs and operations generate a multiplicity of semi-finished items which may have to wait for further operations to be done on them. When hundreds or thousands of such variations in operations –or-materials are to be handled, a systematic detailed daily plan is called for. Refer Diagram slide no. 118
BASICS OF ERP
1. Enterprise resource planning, popularly known as ERP, is today’s buzz word in the corporate world. Companies worldwide use ERP to integrate business processes and thereby reduce cost and increase productivity. 2. Businesses, non-profit organizations, nongovernmental organizations, governments and other large entities utilize ERP systems.
3. ERP is a software package developed for optimum use of resources of an enterprise in a planned manner. ERP integrates the entire enterprise starting from the supplier to the customer covering logistics, financial and human resources. ERP is a package for cost saving. Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain,Financials,Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System. Today ERP systems typically handle the manufacturing, logistics,distribution,inventory,shipping,invoicing, and accounting for a company. ERP software can aid in the control of many business activities, like sales,marketing,delivery,billing,production,inventory management, quality management, and human resource management.
Advantages
In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve: ? Design engineering (how to best make the product). ? Order tracking from acceptance to fulfillment. ? The revenue cycle from invoice through cash receipt. ? Managing interdependencies of complex bill of materials. ? Tracking the 3-way match between the purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced). ? Accounting for all these tasks, tracking the revenue, cost and profit at regular intervals.
Disadvantages ? ERP system is often operated by personnel with inadequate education in ERP in general. ? Customization of ERP software is limited. ? Reengineering of business processes to fit the “industry standard” prescribed by the ERP system may lead to loss of competitive advantage. ? ERP systems can be very expensive to install. ? ERPs are often so rigid and too difficult to adapt to the specific workflow and business processes of some companies. ? Systems can be difficult to use. ? Once a system is established, switching cost are very high. ? Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software. ? The system may be over-engineered relative to the actual needs of the customer.
BASICS OF PROJECT MANAGEMENT
A Project may be defined as a series of related jobs usually directed towards some major output and requiring a significant period of time to perform. Project Management can be defined as planning, directing and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of the project. A project plan can be considered to have five key characteristics that have to be managed: Scope: defines what will be covered in a project. Resource: what can be used to meet the scope. Time: what tasks are to be undertaken and when. Quality: the spread or deviation allowed from a desired standard. Risk: defines in advance what may happen to drive the plan off course, and what will be done to recover the situation. The sad thing about plans is you cannot have everything immediately. Any people plan using planning software packages, without realizing the tradeoffs that must be made. They assume that if they write the plan down, reality will follow their wishes. Nothing is further from the truth. The point of plan is to balance. The scope, and quality constraint against, The time and resource constraint, While minimizing the risks
Management of Projects 1. Planning – goal setting, defining the project, team organization 2. Scheduling – relates people, money and supplies to specific activities and activities to each other 3. Controlling – monitors resources, costs, quality and budgets; revises plans and shifts resources to meet time and cost demands.
Project Management Activities Refer Slide no. 128
The Role of the Project Manager Highly visible Responsible for making sure that: ? all necessary activities are finished in order and on time
? The project comes in within budget ? The project meets quality goals ? The people assigned to the project receive motivation, direction and information.
Project Characteristics • • • • • • • • • • • • • Project are Unique Projects have definite beginning and ending dates Projects are completed when the project goals are achieved It is focused on the customer and customer expectations. It is collection of activities, that are linked together to achieve certain results It is complex and involves different departments It has to be flexible to accommodate the changes It has many unknown factors & external influences It has cost constraints Involves risks Comprises many sub-projects Requires expertise in many fields Challenges Traditional line of authority
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Provides opportunity for learning Builds team spirit It consumes large resources It requires special control mechanism It is task & performance oriented It requires a task & performance oriented leader
METHOD STUDY
• Method Study and Work Measurement are the two basic techniques of work study. While Method Study aims to improve the existing methods of operations and procedures, work measurement helps to assess the human effectiveness. Though these two are distinctly separate techniques, they are very much interdependent. The application of both these techniques in adequate proportions based on the nature and type of problems would result in maximum benefits to the organisation. Method Study is essentially concerned with finding better ways of doing work. It is a technique of cost reduction. The philosophy of Method Study is, “there is always a better way” and the tools of Method Study are designed to systematically arrive at this “better way of doing a job”. Method Study can be applied to almost all types of work, whether it be a factory, electrical or any other type of activity. The scope of Method Study is not restricted to manufacturing industries alone, but extends to all other spheres. Methods improvement has been very successfully adopted in banks, hospitals, offices and retailing, in addition to defence, agriculture and all types of industries. There are various techniques which are suitable for tackling Method Study problems on all scales and for all types of work. There is no limit to the types of work which can be profitably studied. Another important aspect of Method Study is that often, with limited capital expenditure, it would be possible to obtain considerable economies in the use of resources and achieve large monetary savings. Method Study is the systematic recording and critical examination of existing and proposed ways of doing work, as a means of developing and applying easier and more effective methods and reducing costs. (Definition adopted in the B.S.Glossary of terms in Work Study.)
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? OBJECTIVES The objectives of Method Study are – i) Improve basic processes.
ii) Improve the design of plant and equipment. iii) Improve factory, office and work place layouts and handling of materials. iv) Improve the use of material, plant, equipment and power. v) Improve the working procedures. vi) Improve the working environment. vii) Improve quality
? METHOD STUDY PROCEDURE The analysis of problems for Method Study consists of an ordered and systematic procedure. This procedure involves six basic steps as follows: • • • • • • SELECT the work to be studied RECORD all relevant facts EXAMINE these facts critically DEVELOP the most effective, economical and practical method INSTALL the method as standard practice MAINTAIN the standard practice by regular checks
The above procedure is a logical one and is easy to follow in any type of work. Each of the steps is equally important and clearly defined. Faithful adherence to the basic procedure would result in achieving maximum results.
Selection of work for Method Study is the first step. The field of choice for Method Study is quite wide and every job is amenable to improvement. But the selection of the job should be based on scope and need for improvement, resulting economy, priority, objective and similar other considerations. Once the job has been selected, the next step is to record all the pertinent facts relating to the present or proposed method. There are a variety of recording techniques suitable for different types of situations. A proper recording is necessary since it forms the basis for further investigation. Critical examination is the crux of Method Study.
All these recorded facts are subjected to a thorough examination. Nothing is taken for granted and each activity is challenged with a view to get as many alternatives and improved methods as possible. All the alternative proposals thus obtained are evaluated and the most practical and economical method is developed. Considerable planning and preparation is necessary before the proposed method is installed. Full cooperation and participation from the Management, Supervisors and workers is essential for the implementation of the new method. A number of difficulties may crop up when the proposed method is under operation. There is also a tendency on the people to get back to the old methods with the slightest of excuses. Proper maintenance through routine and regular checks is an important factor in the Method Study procedure.
QUALITY CONTROL AND INSPECTION
• It is important that production process meets the quantity goals established in the production schedule, but it is of equal importance that the output meets the quality specifications as well. To manufacture products of desired quality, control over their quality must be exercised throughout the production and associated functions, including production planning, procurement and distribution. Quality considerations are present in every aspect of the production cycle – from the purchase of raw material to the customer. Monitoring all the quality level is usually assigned to a staff group that reports to the top management. Organizationally, this group is commonly referred to as Quality Control. The authority that quality control exercises varies according to the relative defect of controlling quality and to management assessment of the consequences of circulating the defective products. Since quality assurance enters into so many linkages within the production system, more support is needed from all levels of management than for most of the functions. No single department or staff can assure quality by itself. It takes cooperation of line workers, the supervisors and related staff organization. Quality assurance is a skill. Like other skills, if it is not continuously exercised, it will deteriorate. Also, it has been said that “quality is everybody’s concern.” But a job that belongs to everybody can easily become a job that nobody does.
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The overall value of the quality organisation should be judged by the ratio of cost incurred to cost saved, and not by the glamour of its own advertisements. • Cost of vigilance versus cost of error: In most production situations, the cost of vigilance and error varies inversely. Greater vigilance may take the form of extra time taken by individual worker, close supervision, additional test for products and inspection of all or portion of the output. The cost of error includes re-work, rejects and customer dissatisfaction. Somewhere
between the extremes of no vigilance and extra vigilance is a point where control over the magnitude of errors produces a minimum total cost. • Inspection versus quality control: Inspection is an act of comparing a product with accepted specifications or other recognized standards. The purpose of this inspection is to know where the product conforms to or does not conform to the specified quality limits expressed in the specifications. Units of the product found to conform are accepted; others are rejected.
Inspection is essentially a post-mortem operation performed on the product after it has been completely processed. As a screen operation, the purpose of inspection is to separate products into two classes: accepted and not accepted.
Inspection operation itself adds nothing to the value of the product. Hence, the inspection operation itself does not improve product quality and neither does it reduce rejections, since it involves no corrective action on the operation. • The problem is, how to guarantee a product of high quality to the customer and not burden the manufacturer with the loss of high percentage of rejections entailed by the inspection screening operation. The answer to this lies in quality control. Quality control is a system of inspection, analysis and action applied to a manufacturing process so that by inspecting a small portion of the product currently produced, an analysis of its quality can be made to determine what action is required on the operation to achieve and maintain the desired level of quality. In its broader application, quality control is a preventive tool and is used to minimize rejections to the end that all products and processes will meet the specified quality limits.
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Types of Inspection The two basic types of inspection are called “variables” and “attribute”. When precise measurements are made of dimensions, weight or other critical characteristics capable of expression on a continuous scale, the products are being subjected to variables inspection. The alternative to exact measurements is to set limits within which the product is judged acceptable or defective. A go-no-go rating results from an attribute inspection. Since a good or bad grading normally requires less time and skill to make and uses lower-cost equipment than exact measurements, attribute inspection is usually less expensive than variables inspection. • Precise measurements require closely calibrated devices, rulers, micrometers, scales, meters, etc., capable of measuring the product’s fineness standard. Devices to check attributes are designed to provide a quick verdict of acceptability – go-no-go gauges, snap gauges, templates, etc.
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Statistical sampling techniques frequently reduce inspection cost. The use of samples to replace 100% inspection is usually appropriate for machine output where units are not so likely to vary as are hand-crafted products. High production quantities and expensive inspections also suggest sampling. Then there is destructive testing (the performance test destroys the unit tested) which absolutely rules out 100% inspection. Statistical Quality Control:- The application of statistical techniques for measuring and improving the quality of product. It includes statistical process charts, diagnostic tools (pareto charts, flow charts, fishbone etc.), sampling plans & other statistical techniques.
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BASICS OF ISO 9000
• • • • • ISO is derived from the Greek work isos, meaning equal. ISO is a worldwide federation of national standard bodies from 178 countries. ISO 9000 is a series of standards that help organisations define and maintain a quality system. ISO is not a quality assurance system. ISO 9001.2008 deals with the requirements that organisation wishing to meet the standard have to fulfill The standards merely stipulate where organizations need documentation to validate processes and approaches but never dictates how much they require. The ISO 9000 standards basically have three requirements: The company must document quality system and business process in detail The company must make sure each employee understands and follows the guidelines put forth by the documentation. Documented quality system must be constantly monitored through internal and external audits, and changed or updated when necessary.
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Benefits of ISO9000 registration • • • • Higher perceived quality Improved customer satisfaction Reduced customer quality audits Better documentation
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Greater quality awareness Positive cultural change Increased efficiency and productivity Competitive edge
There are many standards in the ISO 9000 family including: • • • ISO 9001:2008 – sets out the requirements of quality management system ISO 9000:2005 – covers the basic concepts and language ISO 9004:2009 – focuses on how to make a quality management system more efficient and effective ISO 19011 – sets out guidance on internal and external audits of quality management systems
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ISO ? Does not impose additional requirements on your work processes. ? Does not require standardizing our work to confirm to another quality standard. ? Does requires us to document how we do our work and then follow our own instructions. All processes will be managed in accordance with the following ISO principles: ? Does not dictate how you should perform your work. ? Say what you do; ? Do what you say; ? Prove it!
BASICS OF ISO 14001
• • ISO 14001 latest version is 2004. It is a Environmental Management System addressing environmental issues.
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It is not mandatory and not customer driven. Organization has to decide whether it wants to self certify or get its system certified by an authorized body for authenticity. The company having ISO 14001 should define objectives and targets which are measurable and which can be monitored. The company will maintain manual as per ISO guidelines and should contain scope (dept or complete office), procedures (how to monitor, measures which will be take up), emergency plan, training to employees, roles and responsibilities of HOD’s, legal requirements, etc. In the HSE policy the company should make commitment towards preventing pollution, injury and ill-health in their operations by proactively addressing HSE concerns in their activities and services and make provision for continuous improvements..
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VALUE ENGINEERING AND VALUE ANALYSIS
What is Value Analysis? Value Analysis is: • • a task of finding a more economical way of making or buying a product a systematic, organized approach for attaining the same performance at lower cost (equivalent performance at reduced cost) an organized approach to a problem, drawing on all available sources of information and expert knowledge and coordinating the resulting data towards the objective of cost reduction a cost reduction programme to improve value / cost ratio of a product, material or service value engineering applied at the design stage itself a process of substitution to achieve cost reduction incidentally a means for interaction to take place in a controlled environment which minimizes conflict and maximizes results a method used for improving the product value by improving the relationship between the function of the product and its cost
•
• • • •
•
Objectives of Value Analysis i. ii. iii. To provide better value to a product / service To improve the company’s competitive position To ensure that every element of cost (labour, materials, suppliers and service) contribute proportionately to the function of the product.
Road Blocks to Value Analysis i. ii. iii. iv. v. We have done it this way for 15 years. Why change now? Our business is different We don’t do things that way in our firm It is jolly good idea. Let somebody else try it first It has been tried before – infact we do it all the times
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SNO 1 2 3 4 5 6 7 8 9 10 11 12 TOPICS BASICS OF OPERATIONS MANAGEMENT KEY TERMS IN OPERATIONS MANAGEMENT FIVE GUIDING PRINCIPLES IN TQM OPERATIONS STRATEGY PRODUCT DESIGN AND PROCESS DESIGN AGGREGATE/CAPACITY PLANNING TYPES OF PRODUCTION FACTORY LOCATION FACTORY LAYOUT MATERIAL HANDLING PRODUCTIVITY BASICS OF JOB SCHEDULING
13 14 15 16 17 18 19 20
BASICS OF ERP BASICS OF PROJECT MANAGEMENT METHOD STUDY QUALITY CONTROL AND INSPECTION BASICS OF ISO 9000 BASICS OF ISO 14000 JOB SEQUENCING VALUE ENGINEERING AND VALUE ANALYSIS
BASICS OF OPERATIONS MANAGEMENT
Operations Management – Introduction Definition Production and Operations Management (“POM”) is about transformation of production and operational inputs into “outputs” that when distributed, meets the needs of customers. Operations Management is the systematic direction and control of processes that transform inputs into finished goods and services. It involves the responsibility of ensuring the business operations are efficient in terms of using as little resources as needed and effective in terms of meeting customer requirement.
INPUTS
TRANSFORMATION PROCESS
OUTPUTS
The process in the above diagram is often referred to as the “Conversion Process”. There are different methods of handling the conversion or production process-Job, Batch, Flow.
What is Operations Management? Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development and utilisation of resources that firms need to deliver the goods and services their clients wants. The purvey of OM ranges from strategic to tactical and operational levels. Representative strategic issues include determining the size and location of manufacturing plants, deciding the structure of service or telecommunications networks, and designing tecnology supply chains. Tactical issue include plant layout and structure, project management methods, and equipment selection and replacement. Operational issues include production scheduling and control, inventory, management, quality control and inspection, traffic and materials handling, and equipment maintenance policies.
Production of Goods vs. Services Key Differences
CHARACTERISTIC MANUFACTURING SERVICES
Output Customer contact Uniformity of input Labour content Uniformity of output Measurement of productivity Opportunity to correct quality problems Tangible Low High Low High Easy High Intangible High Low High Low Difficult Low
Scope of Operations Management Operations Management includes: ? Forecasting demand ? Deciding where to locate facilities ? Capacity planning ? Scheduling ? Managing inventories ? Assuring quality ? Motivating employees ? And many more……..
Operations Management Interfaces with Every Other Functional Area (Diagram from PPT)
OPERATIONS MANAGEMENT TASK: ADD VALUE (Diagram From PPT)
OPERATIONS MANAGEMENT-INTRODUCTION Definitions The terms production management and operations management are often interchanged. “Production” is directly related to the manufacturing of goods. In the world of services, production refers to the service delivery. “Operations” refers to the daily actions necessary for the system to work. A “Production System” is a system whose function is to transform an input into desired output by means of a process (the production process) and of resources. Resources
Input
Production Process
Output
Examples of Production Systems
Automobile Factory Input Output Process Resources Raw Material Complete cars Fabrication, Assembly Assembly line, Workers
Hospital Input Output Process Resources Patients Healthy Individuals Health care Medical Doctors, Nurses,Medical supplies, Equipment
KEY DECISIONS OF OPERATIONS MANAGERS ? What ? When ? Where ? How ? Who Designed Work to be done Needed / scheduled / ordered What resources / what amount
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To do the work
Critical Decisions Made by Operational Managers ? Service and Product Design ? Quality Management ? Process and Capacity Design ? Location ? Layout Design ? Human Resources and Job Design ? Supply – Chain Management ? Inventory Planning, and JIT
New Challenges in OM From ? Local or national focus
? Batch shipments ? Low bid purchasing ? Lengthy product development ? Job specialization ? Standard products To ? Global focus
? Just – in – time ? Supply chain partnering ? Rapid product development, alliances
? Mass customization ? Empowered employees, teams
What Operations Managers Do
? Planning ? ? ? ? Organizing Staffing Leading Controlling
KEY TERMS IN OPERATIONS MANAGEMENT
1. Project Management – Planning, directing and controlling resources (people, equipment, material) to meet the technical cost and time constraints of a project. 2. Productivity – is the ratio of the input facilities to the output of goods and services. 3. Throughput time – the average time that it takes a unit to move through an entire process. 4. Throughput rate – the output rate that the process is expected to produce over a period of time. 5. Total Quality Management – managing the entire organization so that it excels on all dimensions of products and services that are important to the customer. 6. Six Sigma – a statistical term which measures how far a process varies from perfection. It provides techniques and tools to improve capability and reduce defects. It allows only 3.4 defects per million parts or service transaction. 7. PDCA Cycle – also called “ The Deming Cycle” refers to the plan-do-check-act cycle of continuous improvement. 8. Continuous improvement – the philosophy of continually seeking improvements in processes through the use of team efforts.
9.
Kaizen – Japanese term for continuous improvement.
10. Lean production – integrated activities designed to achieve high volume, high quality production using minimal inventories of raw material, work in process and finished goods. 11. Kanban – is scheduling system that tells us what to produce,whwn to produce and how to produce. It is system of continuous supply of component and parts such that workers have what they need, where they need and when they need. 12. Throughput – the rate at which money is generated by the system through sales (Goldratt’s definition). 13. Inventory – the money that the system has invested in purchasing things it intends to sell (Goldratt’s definition). 14. Operating Expenses – all the money that the system spends to turn inventory into throughput (Goldratt’s definition). 15. Value analysis / Value engineering – analysis with purpose of simplifying products & processes by achieving equivalent or better performance at a lower cost. 16. Order Qualifiers – Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase. 17. Order Winners – Characteristics of an organization's goods or services that cause it to be perceived as better than the competition. 18. Value analysis / Value Engineering – analysis with purpose of simplifying products & processes by achieving equivalent or better performance at a lower cost.
FIVE GUIDING PRINCIPLES IN TQM ? Results through processes ? Continuous improvement of processes ? Managing with facts ? Management establishing priorities ? Involvement of everyone through teamwork
When things go wrong, first ask what in the process broke down, not who did it.
OPERATIONS STRATEGY
Definition of Strategy Strategy relates to the overall action plans that determine the direction an organisation takes in pursuing its goals and objectives.
Definition of Operations Strategy A plan of action implemented by the firm that describes how they will employ their resources in the production of a product or service. An operational strategy is a necessary element for a business and supports the firm’s corporate strategy.
The six specific strategies are:
? ? ? ? ? ? Flexibility in design & volume Low price Delivery Quality After sales service A broad product line
Through these six specific strategies, operation managers can increase productivity and generate sustainable competitive advantage.
Business / Functional Strategy (Diagram from PPt)
Operation Strategy Formulation • How will operations support the organization’s strategies? ? ? ? ? ? Identify distinctive competencies Environmental scanning SWOT Identify Order qualifiers Identify Order winners
Refer Slides 28,29,30 for diagram
Examples of Distinctive Competencies Employed by Firms
Price Quality
Low cost High-performance design or high quality consistent quality
Nirma Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola Express Mail, Fedex, One-hour photo, UPS Burger King Supermarkets Disneyland Nordstroms Banks, ATMs
Time
Rapid delivery On-time delivery Variety Volume Superior customer service
Flexibility
Service
Location
Convenience
Operations Strategy at Wal-Mart Refer Diagram from PPT (32)
Clients look to Operations Strategy for help with these critical business issues: ? Cost efficiency and performance improvement ? ? ? ? ? ? ? ? Focus on company’s core business Increasing shareholders value Continuous process improvement Maintaining competitive edge Improving customer service quality Migration to new technology Product innovation management Merger synergy realization
PRODUCT DESIGN AND PROCESS DESIGN
Product Design can be defined as the idea generation, concept development, testing and manufacturing or implementation of a physical object or service. The development of a new product passes through eight distinct stages as shown in the figure below: Refer Diagram from slide no. 35
Process Design is concerned with the overall sequences of operations required to achieve the product specification. It specifies the type of work stations that are to be used, the machines and equipments necessary and the quantities in which each is required. The sequences of operations in the manufacturing process is determined by ? The nature of product
? ? ?
The materials used. The quantities being produced and The existing physical layout of the plant.
Major Factors affecting Process Design Decisions ? ? ? ? ? Nature of product/service demand. Degree of vertical integration. Product/service and volume flexibility. Degree of automation. Level of product/service quality
Refer Diagram from slide no. 37
AGGRREGATE / CAPACITY PLANNING
Aggregate planning involves planning: ? The best quantity to produce during time periods in the intermediate-range horizon (often 3 months to 1 year). ? The lowest cost method of providing the adjustable capacity to accommodate the production requirements. ? Workforce size, production rate (work hours per week) and inventory levels. Objectives of Aggregate Planning To develop plans that are: ? Feasible: The plans should provide for the portion of demand that the firm intends to meet and should be within financial and physical capacity of the firm. Optimal: The firm should aim for plans which will ensure that resources are used as wisely as possible and cost kept as low as possible.
?
? To increase the range of alternatives of capacity use, that can be considered by the management of the firm.
Operations Planning and Scheduling System This system is concerned with the volume and timing of outputs, the utilization of operations capacity and balancing outputs with capacity at the desired levels of competitive effectiveness.
Aggregate Output Planning It is the process of determining output levels (units) of product groups over the next 6 to 18 months period on a weekly or monthly basis. The plan indicates the overall level of output supporting the business plan. Aggregate Capacity Planning It is the process of devising plan for providing a production capacity scheme to support the intermediate range sales forecast. Refer Diagram from slide no. 44
In developing an intermediate aggregate capacity plan, the variables that may be manipulated to vary the production capacity from month to month are: ? The size of workforce. ? The use of overtime or idle time ? The use of inventories or back orders ? The use of sub-contractors ? The approval of design and drawings
Cost associated with Aggregate planning ? Pay roll cost
? Cost of overtime, second shift and subcontracting. ? Cost of hiring and laying off workers. ? Cost of excess inventory and backlog. ? Cost of production rate changes
Types of Capacity Fixed capacity: The capital assets (buildings and equipments) at a particular time are known as the fixed capacity. Adjustable capacity: It is on and the size of the workforce, the numbers of hours per week they work, the number of shifts and extent of sub-contracting. Design capacity: it is the planned rate of output of goods and services under normal operating conditions, It is also known as installed capacity. System capacity: it is the maximum output of a specific product or product- mix that the system of workers and machines is capable of producing. Potential capacity: it is that capacity which can be made available within the decision horizon of the top management. Effective capacity: It is the capacity which is used within the current budget period. It is also known as practical capacity or operating capacity. Actual capacity: This is actual output achieved during a particular time period.
The figure given below illustrates the relationship between design capacity, system capacity and actual output. Design capacity
System capacity
Actual output
Measurement of Capacity Capacity may be measured in terms of inputs or outputs of the conversion process, Some of the examples of common measures of capacity are given below: Organization Automobile factory Steel mill steel Power plant Brewery Airline Hospital University Measures of capacity No of vehicles Tons of Megawatts of electricity generated Barrels of beer No of seats No of beds No of students Input rate capacities Output rate capacities
Capacity Decisions Major considerations in capacity decisions are: ? What size of plant? How much capacity to install? ? When capacity is needed? When to phase-in capacity oe phase-out capacity? ? At what cost? How much budget for the cost? Determination of Capacity Capacity determination is a strategic decision in factory planning. Capacity decisions are important because: ? They have a long term impact ? Capacity determines selection of appropriate technology, type of labor and equipments, etc. ? Right capacity ensures commercial viability of the business venture. ? Capacity influences the competitiveness of a firm.
Factors affecting determination of Plant Capacity ? Market demand for a product/service. ? The amount of capital that can be invested. ? Degree of automation desired. ? Level of integration (i.e. vertical integration). ? Type of technology selected ? Dynamic nature of factors affecting determination of plant capacity, viz; changes in product design, process technology, market conditions and product life cycle, etc. ? Difficulty in forecasting future demand and future technology. ? Obsolescence of product and technology over a period of time. ? Present and future demand. ? Flexibility for capacity additions.
TYPES OF PRODUCTION Refer diagram on slide no. 53
Intermittent production
Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). In the intermittent production, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible.
Following chart highlights the concept of an intermittent production system.
Customer’s Order & Customer’s Specific
Intermittent Production
Following are examples on the intermittent production. Please refer above chart while reading examples given below. 1. The work of a goldsmith is purely based on the frequency of his customer's orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. Here, ornaments are not done on a continuous basis. 2. Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis.
The features of an intermittent production are depicted below
Features of Intermittent Production
1. Flow of Production is not Continuous 2. Variety of Products are Produced 3. Volume of Production is Small 4. General Purpose Machines are used 5. Sequence of Operation changes as per Design
The characteristics of an intermittent production system are listed as follows: 1. The flow of production is not continuous. It is intermittent. 2. Wide varieties of products are produced. 3. The volume of production is small. 4. General purpose machines are used. These machines can be used to produce different types of products. 5. The sequence of operation goes on changing as per the design of the product. 6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.
Continuous production
Continuous means something that operates constantly without any irregularities or frequent halts. In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence.
Following chart highlights the concept of a continuous production system.
Following are examples on the continuous production system. Please refer above chart while reading examples given below. 1. The production of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production. 2. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand. 3. Other examples – Chemical Industry, Automatic Industry
The features of a continuous production system are depicted below.
Features of Intermittent Production 1. Flow of Production is Continuous & not intermittent 2. Products are Standardized 3. Products are produced as per Quality Standards 4. Products are produced in Anticipation of Demand 5. Standardized routing sheets and schedule are prepared
The characteristics of a continuous production system are listed as follows: 1. The flow of production is continuous. It is not intermittent. 2. The products are standardized. 3. The products are produced on predetermined quality standards. 4. The products are produced in anticipation of demand. 5. Standardized routing sheets and schedules are prepared.
Depending upon the scale of production and the kind of product, the production can be classified as: 1. Piece or job lot production, 2. Batch or medium size production and 3. Mass (or bulk) production. This classification is important, because depending upon the scale of production, different manufacturing strategies are adopted by plant managers for efficient production.
FACTORY LOCATION
Introduction ? The prime criterion for a preferred location is the least total cost, the minimum delivered-tocustomer cost of the product or service. The location of factory may well have a substantial effect upon the operation of the unit and on the factories within a geographical region. No set of rules can be laid down whereby the solution to the problem of location can be solved or programmed. There are, however, a number of factors, such as raw material availability, labour costs, and so on, which should be considered and these factors will be discussed in detail later. ? A plant location problem is not encountered everyday, but the factors that can create a problem are constantly developing. Technological improvements make existing products noncompetitive. New products replace established lines. A requirement for different materials or a change in the source of materials alters supply costs, power, water or other resource needs are subject to production levels which in turn are a function of demand. Any or all of these factors can force a firm to question whether its plant should be altered at the present location or moved to another locality. ? It is worth differentiating between the problem of location and of site. The location is the general area and the site is the place chosen within the location. The decision on site thus probably proceeds in two stages: in the first stage the general area is chosen and then a detailed survey of that area is carried out to find possible site. ? Thus, a study to identify the best location typically starts with an evaluation of regional factors and progresses to particular communities within the favored region. Information of a general nature suffices to rate regions. They are compared with respect to market proximity, raw material, tax rates, and other characteristics of special interest to the organization seeking the site. The factors affecting the choice of a community and a particular site within the community involve specific details.
? The models given here for factory location can be used for both the selection of a location and also for the selection of a site in a particular location. The selection of a site decision is probably made by taking into account the more detailed factors than considered for selection of a location (……. is the view pleasant? ……. is there a good restaurant nearby?…….).
Factors affecting location
The following are some of the factors which will influence the choice of location –either for a new construction site or for an available building shed. 1. Integration with other group companies
If the new factory is one of a number of factories owned or operated by a single group of companies, the new factory should be situated such that its work can be integrated with the work of associated factories or warehouses. This will require that the group should be considered as an entity, not as a number of independent units. (There is a high possibility of using the linear programming model for such factory locations.) 2. Availability of transport
In some cases, where products or purchased parts are heavy and bulky, it is important that goods transport facilities shall be readily available. Goods intended largely for export indicate a location near a seaport or a large airfield. Years ago industrial growth began in seaports because of reliance on inexpensive ocean traffic. As the railroad network grew, the relationship of raw materials to manufacturing to markets became more flexible. Air and trucking transportation encouraged further versatility and industrial centers spread throughout the land. The distance in time between supply and demand is ever diminishing. 3. Availability of materials While it is true that good transport facilities will enable goods to be obtained and delivered readily, a location near main suppliers will help to reduce cost and permit staff to go readily to see suppliers to discuss technical or delivery problems. Any buyer who has tried to improve deliveries from an inaccessible supplier will bear witness to the considerable difficulties involved.
4. Availability of services There are six main services that need to be considered, namely – a) Gas b) Electricity c) Water d) Drainage e) Disposal of waste f) Telephone
Certain industries use considerable quantities of water for food preparation, laundries, metal plating, etc. Others use a great deal of electricity for chemical processing and so on. An assessment must be made of the requirements of the factory for as far ahead as possible. Underestimating the needs of any of the services can prove to be extremely costly and inconvenient. 5. Suitability of land and climate
Here, not merely must the genealogy of the area be considered, that is, whether the subsoil can support the loads likely to be placed on it, but also whether the climatic conditions (humidity, temperature and atmosphere) will adversely affect the manufacture. Modern building techniques are such that almost all disadvantages of terrain and climate can be overcome, but the cost of so doing may be high and a different locality could avoid an inflated first cost. 6. Site cost
As a first cost, the site cost is important, although it is important not to let immediate gain jeopardize long term plans. 7. Availability of amenities
A location which provides good amenities outside the factory – shore, theatres, cinemas, restaurants – is often much more attractive to staff than one which is more remote. This is particularly so where a large proportion of married women are employed who find it convenient to shop for the family during the lunch-break and on the way home. One important amenity in this connection is good personnel transport buses and trains; and some companies find this so vital that they provide special company buses. Other amenities such as good canteen, co-operative stores, child-care are also important. 8. Availability of labour
Labour may be more readily available in some cases than in others. The Department of Trade & Industry can provide information on this point. Certain areas, however, have traditional skills. For example, woollen products in Punjab and coir products in Kerala. It is very rate today that a location can be found which has appropriate skilled labour both readily available. (Big cities, however, could be excluded from this generalization.) The choice has to be made between a location where skilled men
exist but are not readily available and where there is a supply of unskilled labour. It must be remembered that new skills can be taught, processes simplified and made less exacting and key personnel moved. The importance of labour depends, of course, on the particular firm, its policies and its products. If the firm is science-oriented, it should anticipate going to an area where engineers and scientists congregate because it is unlikely that many can be lured to remote sections. 9. Labour stability Thorough precautions to assure low production costs are of no avail unless the proposed new labour laws and regulations can operate with continuity and tranquil labour-management relations. More than one company has been forced out of business because of unreasonable or prohibitive labour demands. Wage increases and jurisdictional disputes continue to be important points of conflict. The question of labour stability must be approached from a positive standpoint. There are certain strong points of community attitude that should influence its selection. Perhaps, the most crucial question that can be asked about a community is “What is its past history?” 10. Availability of housing Where staff has to be recruited other than locally, housing will need to be available. It is general experience that the offer of good housing can be of greater assistance in attracting staff than almost any other factor. 11. Local building and planning regulations It is important to check at an early stage that the proposed location does not infringe any local regulations. A discussion with the surveyor’s department of the local authority is most desirable. Compliance with pollution standards is a recent location constraint for heavy users of air and motor resources. Reliable fuel and raw material supplies may become critical factors in the future. 12. Room for expansion It is most unwise to build a factory to the limit of any site. Adequate room for genuine expansion should be allowed. It is dangerous to assume that at a later date the car park can be built on or that the canteen can be used as a productive area. 13. Safety requirements Some factories may present, or may be believed to present, potential dangers to the surrounding neighbourhood; for example, nuclear power stations and explosive factories are often considered dangerous. Location of such plants in remote areas may be desirable or locating at a safe distance from such factories would be advisable. 14. Adequacy of circulation
The movement of goods, visitors and staff to and from a factory presents a problem not only of easy access but also easy control. There is also a need for emergency access – fire fighting equipment or ambulances – which if impeded could endanger life and seriously affect the company. 15. Political situation The political situation in potential locations should be considered. 16. Special grants Government and local authorities often offer special grants, low interest loans, low rentals and other inducements in the hope of attracting industry to particular locations. As these are often areas with large reservoirs of labour, these offers can be most attractive. Every State in India has got different bodies that advise on product selection and plant location. In Maharashtra, these are: SICOM, MIDC, MSSIDC and SISI. 17. Taxation Few industries have relocated their plants solely because of unfavourable State taxes. It is rather the cumulative effect of this factor and other high cost factors that may prompt a manufacturer to consider relocation. 18. Availability of car space There is no doubt that the use of cars as a means of transport to and from work will increase, whatever public transport facilities are provided. If open space is not available for car parking, special car-park structures may be necessary. It is difficult to satisfy all the above factors for plant location. However, a compromise between what is wanted and what can obtained may be the only solution.
1. 2. 3. 4. 5. 6. 7. 8.
Integration with other group companies Availability of transport Availability of materials. Availability of services. Suitability of land and climate. Site cost. Availability of amenities. Availability of labour.
9.
Labour stability.
10. Availability of housing. 11. Local building and planning regulations. 12. Room for expansion. 13. Safety requirements. 14. Adequacy of circulation. 15. Political situation. 16. Special grants. 17. Taxation. 18. Availability of car space
FACTORY LAYOUT
? Introduction The disposition of the various parts of a plant, along with all the equipment used therein, is known as the Plant Layout, which should be designed to enable the plant to function most effectively. Plant Layout is a companion problem to Plant Location. A decision to relocate provides an opportunity to improve total facilities and services. A decision not to relocate is often accompanied by plans to revise the current plant arrangement. The re-layout must be designed to reduce increasing production costs that gradually evolve from piecemeal expansion or to introduce an entirely new process. In either case, the re-layout strives to maximize production flow and labour effectiveness. In this section, we shall explore the relationship of production departments – grouping of production activities – rather than individual machines or architectural features. A facility layout of a hospital would concern emergency rooms, operating theatres, patient rooms and even the parking lot, but it would not initially involve the location of an x-ray machine or a cash register. However, the detailed equipment or facilities layout would follow the same methodology as the overall departmental layout. ? Objectives of Plant Layout The chief objectives are likely to be improved operations, increased output, reduced costs, better services to customers, and convenience and satisfaction for company personnel.
? Types of Plant Layout • There is a layout by fixed position or by fixed material location. This is a layout where the material or major component remains in a fixed place. All tools, machinery, men and other pieces of material are brought to the major component. The complete job is done or the product is made with the major component staying in one location. Ship-building and heavy construction of dams, bridges and buildings are typical examples. Advantages are: Handling of major assembly unit is reduced. Highly skilled operators are allowed to complete their work at one point and responsibility for quality is fixed on one person or assembly crew. Frequent changes in products or product design and in sequence of operations are possible. The arrangement is adapted to a variety of products and intermittent demands. It is more flexible in that it does not require highly organized or expensive layout engineering, production planning or provisions against breaks in work continuity. The disadvantage is that the required movement of materials and machines may be cumbersome and costly. ? Product, Flow, Sequential or Line Layout • Here the Plant is laid out according to the requirements of the product. This is typical of flow production. One product or one type of product is produced in one area. But unlike layout by fixed position the material moves. This layout places one operation immediately adjacent to the next. It means that any equipment used to make the product, regardless of the process it performs, is arranged according to the sequence operations. Diametrically, this is illustrated in Figure 1, where Product 1 goes first to machine-A, then to machine-B, then to machine-C, these machines being used exclusively.
• •
• •
•
for Product 1, Product 2 and Product 3 have their own line of machines (K,L,M, and R,S,T) and, even though machines A,K,R are identical and interchangeable, work is not transferred from one product line to another. Advantages are: 1. Reduced handling of material. 2. Reduced amounts of material-in-process, allowing reduced production time and lower investment in materials. 3. More effective use of labour (a) through greater job specialization and (b) through ease of training. 4. Easier control of production allowing less paperwork and effective supervision. 5. Reduced congestion of floor space otherwise allotted to aisles and storage.
Disadvantages are: 1. Unless volume is very high, machine utilization may be low, with a subsequent high capital investment. 2. One machine breakdown may immobilize a complete production line. 3. The system is inflexible, being unable to accommodate changes. 4. Unless the production is true flow production and all operations balanced, buffer stock (workin-process) will be inevitable. 5. The pace of the line is set by the slowest operation. 6. Any changes in product design, volume, etc., in the line will normally require a major investment.
? Process of Functional Layout In this type of layout, plant is grouped according to its function. Thus, all drilling machines will be together, as will all milling machines, presses, lathes and so on. This is most commonly met with in jobbing product. This is illustrated in figure, where products 1, 2 and 3 all go to machine-A, then after processing, product 1 goes to machine-B and thence to machine-C, while products 2 and 3 go to machine-L. Product 2 then goes to machine-C, while product 3 goes to machine-T. To allow all machines to be fully loaded, work-in-progress stores are necessary between each machine.
Advantages are: 1. 2. 3. 4. 5. Better machine utilization allows lower machine investment. It is adapted to a variety of products and to frequent changes in sequence of operations. It is adapted to intermittent demand (varying production schedules). The incentive for individual workers to raise the level of their performance is greater. It is easier to maintain continuity of production in the event of – (a) machine or equipment breakdown; (b) shortages of material; (c) absent workers
Disadvantages are: 1. 2. Substantial pre-production planning is required if machine loading is to be high. Control is difficult.
3. Buffer stocks are essential; hence, relatively high investment in raw materials and work-inprogress. 4. 5. It increases handling, space requirements and production time. Close supervision is essential.
Which type of layout to use? Use layout by fixed position or fixed material location when – 1. Material forming or treating operations require only hand tools or simple machines. 2. Making only one or a few pieces of an item. 3. The cost of moving the major piece of material is high. 4. The skill of workmanship lies in the abilities of the workers or it is desired to fix responsibility for product quality on one worker or crew.
Use layout by product when – 1. There is a large quantity of pieces or products to make. 2. The design of the product is more or less standardized. 3. The demand for it is fairly steady. 4. Balanced operations and continuity of material flow can be maintained without difficulty.
Use layout by process when – 1. Machinery is highly expensive and not easily moved. 2. Making a variety of products. 3. There are wise variations in times required for different operations. 4. There is a small or intermittent demand for the product. In actual practice, most layouts are a combination of the basic layouts discussed above. They are made to utilize the advantage of all three types of layout.
Criteria for a good layout While the techniques employed in making a layout are normal work-study techniques, the process is a creative one which cannot be set down with any finality, and one in which experience plays a very great part. Furthermore, it is not possible to define a good layout with any precision. However, there are certain criteria which will be satisfied by a good layout, and these are discussed below:
1.
Maximum Flexibility
A good layout will be one which can be rapidly modified to meet changing circumstances. In this context, particular attention should be paid to supply points, which should be ample and of easy access. These can be simply and cheaply provided at the outset of a layout, and failure to do so can often present very necessary modifications to unsatisfactory, outdated or inadequate layouts.
2.
Maximum Coordination
Entry into, and disposal from, any department should be in such a manner that it is most convenient to the issuing or receiving departments. Layout requires to be considered as a whole and not parochially. 3. Maximum use of Volume
A factory must be considered as a cubic device, as there is airspace above the floor area. Maximum use should be made of the volume available. Conveyors can be run above lead height and used as moving work-in-progress stores, or tools and equipment can be suspended from the ceiling. This principle is particularly true in stores, where goods can be stacked at considerable heights without inconvenience 4. Maximum Visibility
All men and materials should be readily observable at all times; there should be no “hiding places” into which goods can get mislaid. This criterion is sometimes difficult to fulfill, particularly when an existing plant is taken over. Every piece of partitioning or screening should be scrutinized most carefully while introducing undesirable segregation and reducing effective floor space.
5.
Maximum Accessibility
All servicing and maintenance points should be readily accessible. For example, a machine should not be placed against a wall in such a manner that a grease-gun cannot reach the grease nipples. The maintenance under these circumstances is likely to be skimped at best and will occupy excessive time. Similarly, a piece of plant in front of a fuse box will impede the work of the electricians and may
cause unnecessary stoppage of the machine when the fuse box is opened. If it is impossible to avoid obscuring a serviced point, then the equipment concerned should be capable of being moved. It should not be a permanent installation. 6. Minimum Distance
All movements should be both necessary and direct. Handling material adds to the cost of the product but does not increase its value. Consequently, any unnecessary or circuitous movements should be avoided. It is a common failing for material to be moved off a work-bench to a temporary storage point. This intermediate rest place is often unnecessary and unplanned, being used only because an empty space appears convenient. The providing of ‘extra’ shelves, benches and tables should be questioned very thoroughly and avoided if possible. 7. Minimum Handling
The best handling is no handling, but where handling is unavoidable it should be reduced to a minimum by the use of conveyors, lifts, chutes, hoists and trucks. Material being worked on should be kept at working height and never placed on the floor if it is to be lifted later. 8. Minimum Discomfort
Poor lighting, excessive sunlight, heat, noise, vibrations and odour should be minimized and if possible counteracted. Apparently, trivial discomforts often generate troubles greatly out of proportion to the discomfort itself. Attention paid to the lighting and general decoration and furniture can be rewarding without being costly. Recommendations on the intensity of lighting for various tasks are published and most manufacturers of lighting equipment will provide useful advise on the subject. 9. Inherent Safety
All layouts should be inherently safe, and no person should be exposed to danger. Care must be taken not only of the persons operating the equipment but also of the passers-by, who may be required to go behind a machine, the back of which is unguarded. Adequate medical facilities and services must be provided, and these must satisfy the Chief Inspector of Factories. Experience shows that the factory inspector is not only most competent to advise on these matters, he is always ready to be of assistance. 10. Maximum Security
Safeguards against fire, moisture, theft and general deterioration should be provided, as far as possible, in the original layout.
11.
Unidirectional Flow
Work lanes and transport lanes must not cross. At every point in a factory, material must flow in one direction only, and a layout which does not conform to this will result in considerable difficulties, if not downright chaos, and should be avoided. 12. Visible Routes:
Definite lines of travel should be provided and, if possible, clearly marked. No gangways should ever be used for storage purposes, even temporarily. The co-existence of a large number of criteria makes the definition of an “optimum” schedule virtually impossible. Furthermore, the writing of a computer programme for plant layout becomes a task of considerable difficulty unless some very drastic simplifications are made. ` 1. 3. 5. 7. 9. Maximum Flexibility Maximum Use of Volume Maximum Accessibility Minimum Handling Inherent Safety 2. 4. 6. 8. Maximum Coordination Maximum Visibility Minimum Distance Minimum Discomfort
10. Maximum Security 12. Visible Routes
11. Unidirectional Flow
Advantages of a good Layout A layout satisfying the above conditions will have the following advantages over one which does not: 1. The overall process time and cost will be minimized by reducing unnecessary handling and by generally increasing the effectiveness of all work. 2. Labour supervision and production control will be simplified by the elimination of hidden corners in which both men and materials can be misplaced. 3. Changes in programme will be most readily accommodated.
4. Total output from a given plant will be as high as possible by making the maximum effective use of available space. 5. 6. A feeling of unity amongst employees will be encouraged by avoiding unnecessary segregation. Quality of products will be sustained by safer and better methods of production.
Symptoms of a poor Layout The main symptoms of a poor layout are: 1. Lack of control. 2. Congestion of men and materials. 3. Excessive re-handling. 4. Long transportation lines. 5. Frequent accidents. 6. Low worker performance.
MATERIAL HANDLING
Material handling may be broadly defined as the movements of materials from one place to another. It may be picking up or putting down, moving horizontally or vertically or in any inclined plans of materials, of any kind in their raw, semi-finished or finished state. ? OBJECTIVE • Material handling often does not add anything to the value of the product but only increases the cost. Handling costs constitute a substantial portion of the total cost of production. Besides, material handling is also found to be responsible for a large percentage of product damage. 80 to 90% of industrial accidents and other disadvantages. In spite of this, material handling is an essential feature of industrial activity. Materials have to be moved from one place to another without which all the activities would come to a standstill. Material handling often accounts for improved utilization of men and machines, and provides for specialization of skills and the related advantages. Since material handling cannot be eliminated completely in any organisation, the objective of material handling may be stated as instituting an efficient system of handling. Eliminating unnecessary and wasteful handling system saves money and time, reduces damage to materials and makes the work safer. Some Principles Some of the major principles in the design of an efficient system of material handling are: a) Reduce handling to a minimum: As far as possible, materials should always move towards completion, over the shortest distance without back-tracking. A large amount of handling can be
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eliminated by planning the location of operations so that one operation finishes right where the next begins. The flow of product should receive top priority in planning of layout.
b) Avoid re-handling: It may not be possible to eliminate re-handling completely. Nevertheless, rehandling is a wasteful and costly operation. Re-handling can be reduced by (i) not keeping anything on floor, (ii) avoiding transfers from floor to container or vice versa or from container to container, and (iii) avoiding making of materials. c) Combine handling with other operations: Many times, handling may be made a productive activity by combining with other operations, such as production, inspection and storage. In process industries, materials undergo physical and chemical changes while in movement, handling devices may be used as live storage of materials may be sorted and inspected while they are being handled d) Ensure safety in handling: Safety is a key word in handling. A large percentage of industrial accidents are attributed to poor handling practices. Even costlier in terms of money is the damage to equipment and products due to improper handling methods. A good handling system should ensure safety to workers and materials. Manual handling of heavy objects, materials scattered on the floor or projecting into aisles are but a few causes of accidents. Keeping gangways and aisles clear is one of the primary precautions against accidents in handling. e) Handle materials in unit loads: It is easier and quicker to move a number of materials at a unit rather than piece by piece. Modern material handling devices are designed to take advantage of unutilized loads. f) Use gravity where possible and mechanical means, if necessary: The simplest and cheapest way to handle materials is by using gravity. Often chutes and inclined boards can be conveniently used to transport materials quickly to the point of use without much investment on costly handling equipment. Where it is not possible to use gravity for various practical reasons, some mechanical means should be considered. Lifting and carrying of heavy materials mechanically saves time and reduces fatigue of workers. g) Select proper handling equipment: There are as many types of handling equipment available today as the number of materials to be handled. And any single equipment may not solve all handling problems. It is therefore necessary to choose the equipment suitable for the job under consideration. The equipment selection needs to be done carefully so that there is an efficient coordination of all handling, resulting in overall economy. Use of standardized equipment facilitates maintenance and repair. Another important factor in the selection of equipment is flexibility. Industrial activity is subject to constant changes and handling equipment should provide for this change. In other words, the equipment selected should be capable of a variety of uses and applications.
h) Reduce terminal time of equipment: The advantage of mechanical and power equipment would be lost of they are made to wait during loading and unloading which may take considerable amount of time. By reducing this waiting time the handling equipment would be released for more productive work. There are various mechanical devices like trailers, tipping arrangements, cranes and hoist arrangements, to quicker loading and unloading operations i) Buy equipment for overall savings:
In selecting equipment, savings in overall handling cost must be the guiding principle rather than the first cost of equipment. Arriving at the handling cost is a difficult problem but a fairly accurate estimate can be obtained by determining the handling elements and applying work measurement. In India, labour is still comparatively less costly and a longer period may have to be allowed for amortizing the handling equipment. All direct and indirect savings are to be taken into consideration while deciding on handling equipment. j) Use labour consistent with handling jobs:
Manual handling could be done by unskilled labour, whereas mechanical handling may require semi-skilled or skilled workers. Proper allocation of skills helps in overall economy. As far as possible, direct production operators should not be used for handling operations. It is preferable to have a separate gang of material handlers to ensure proper utilization of production workers. k) Train workers and maintain equipment:
Careful operation and proper upkeep are essential for getting the maximum out of the handling equipment. Careful selection and training of employees in principles, operation and safety rules and planned maintenance of equipment are worthwhile investments in the long run.
? Material Handling Equipment:
A pre-requisite to the design of a material handling system is a knowledge of the different kinds and types of material handling equipment that are available. Although there are hundreds of different handling equipment, all can be placed in three major categories. ? Conveyors: The first major class of material handling equipment consists of conveyors. A conveyor is any device which moves material in either a vertical or horizontal directions between two fixed points, and this movement can take place either continuously or intermittently.
One of the distinct characteristics of conveyors is that they create a relatively fixed route. Consequently, they are employed primarily in continuous manufacturing in which materials leaving one work station invariably go to some other specific work station in the production line. Therefore, it is possible to connect two such work stations by material handling equipment which is capable of moving materials only between two fixed points. In intermittent manufacturing, however, materials leaving one work station may go to any number of other work stations. Obviously, it would not be feasible to set up a network of conveyors which would provide all the possible route which materials may have to follow. A second characteristic of conveyors is that, unless they are of the portable type, they occupy space continuously. As a result, they must be installed in locations in which they will not interfere with the flow of other traffic. For example, if two work stations are located on opposite sides of an aisle which is used as a path of travel by men and trucks, a floor mounted conveyor could not be used to link these two work stations. Therefore, unless cross traffic can be bypassed, no serious consideration would be given to the use of conveyors.
In so far as listing of different types of conveyors is concerned, the ones most frequently encountered are the following: • Gravity Conveyor: As the name implies, gravity conveyors rely on nature for their driving force. Roller, wheel and chute conveyors call in this category. They are used primarily to move materials and are a relatively inexpensive type of conveyor as a rule, although for some applications, such as in moving grain, they can be quite expensive. Compared with other types, gravity conveyors are highly flexible and transportable and are well suited to variable paths. Movement is restricted, however, to route that involves some degree of vertical fall. Endless chain conveyors: These conveyors are usually driven by an electric motor and, as a consequence, are usually more expensive than gravity conveyors. They have several important advantages, however. These conveyors can move materials up as well as down, and the progress of the materials can be closely controlled. In addition, special carrying devices and containers can be attached to the chain. Frequently, production tasks such as dip painting, cleaning and washing may be performed as the conveyor moves. Finally, by varying the speed of the conveyor at different points, or by building loops into it, work-in-process inventory may be stored between operating stages. Belt conveyors: Belt conveyors are also driven by electric motors. These belts are usually made of some flexible material such as rubber. However, special belts are used in many industries. In the baking industry, for example, Teflon-coated metal is utilized to prevent sticking. The belt passes over rollers, which normally create a trough in the centre of the belt where the materials are concentrated. Conveyors of this sort are used mainly for transporting bulky material. Baggage is moved from the ground to the baggage compartments of airplanes and shipped by conveyor belts. They are also used to move ores from the min face to work areas. Stock brokerage firms and insurance companies even use them to route papers to various parts of
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their buildings. When work is to be performed, however, the materials must be taken from the belt and later replaced when the work is completed. • Other conveyor equipment: Pipelines are often employed for moving liquids and gases such as gasoline and natural gas. Pneumatic tubes are used in some firms for rapid dissemination of internal communications.
Screw conveyors have been successfully used to lift materials in both grain elevators and foodprocessing industry to move delicate foods in steady streams without damage. ? Industrial trucks: Industrial trucks which represent the second category of material handling equipment, are vehicles powered by hand, fuel or electricity, which are capable of transporting materials horizontally between any two points. As opposed to a conveyor, a truck is able to more from one location to any other location so long as suitable traveling surface is available and its path of travel is not obstructed. For this reason, the prevalent method of handling material in a firm engaged in intermittent manufacturing is by means of trucks. The variable path of travel they are able to follow permits them to transport materials from one work station to any of a number of other work stations at which a subsequent operation is scheduled to be performed. A second desirable feature of trucks is that they occupy a given amount of space intermittently. This means that a certain amount of space in a given location is required to house a truck for only as long as the truck is in that location. As soon as the vehicle is moved, the space is free for other uses. As in the case of conveyors, there are many types of trucks, and each of these can be equipped with a variety of attachments. But the most important ones are as follows: Hand operated vehicles, tractors, platform trucks, forklift trucks, straddle carriers. When the loads are not too heavy and the hauls are short, manual equipment may be used. However, when the load size and weight and the distances to be traveled are great, powered equipment is used. Today, most industrial trucks are powered. They are generally equipped with forks or platforms that can be raised or lowered to facilitate the movement and storage of materials, and for this reason the loads are generally placed on pallets or skids. ? Cranes and hoists: The third classification of material handling equipment consists of cranes and hoists. This equipment is able to move materials vertically and laterally in any area of limited length, width and height. It is used primarily when material must be lifted prior to being moved from one point to another. These points may represent different work stations or different locations at a single work station. For example, if a part is large or heavy, the operator may find it necessary to use a hoist to aid him in
loading or unloading the machine. Subsequently, a crane may be used to move the part to another work-station. One of the advantages of cranes and hoists is that they are able to transport objects through the overhead space in the plant. Consequently, space is utilized, which would otherwise be unused, and floor space is freed for other uses. To illustrate, it might be possible to move a large heavy casting by means of a truck from one work-station to another. However, this would create a need for wide aisles at appropriate locations in the plant. If a floor space is at a premium, a more desirable alternative would be to transport the item through the air by means of a crane which would either eliminate the need for certain aisles or, at least, permit the use of aisles which may be required for the movement of smaller objects. But there are cases in which cranes and hoists are used, not because they free floor space but because they are the best available means of positioning material in a particular location. However, when considering cranes and hoists, it is important to keep in mind that any one unit of this equipment is capable of serving on a limited area.The size and shape of this area will vary with the kind of crane or hoist being used. Nevertheless, the equipment is somewhat more flexible in this respect than are conveyors, but not a flexible as are industrial trucks. Also, it will be found that cranes and hoists are as likely to be used intermittently as in continuous production. Again, there are many types of equipment which are placed in the crane and hoist category. However, the most common ones are the following: overhead bridge cranes, gantry cranes, jib cranes, elevators, lifts, chain hoists, air hoists, electric hoists. Overhead bridge crane are commonly employed in factories where large, heavy pieces of equipment such as electrical transformers, generators and power regulators are manufactured. These cranes ride on parallel overhead rails and are usually designed so that they can service any place in the work area of the plant. Another common type of crane, which is designed for outside work, is the gantry crane. It moves in limited areas on wheels, providing its own superstructure, and is chiefly used for such tasks on moving lumber and loading and unloading in railroad freight yards. Large cranes of this sort must be disassembled if they are to be moved from one location to another. This is their main limitation. Elevators and lifts are used to raise everything from materials to workers. Since moving materials on this type of equipment is quite costly, the modern trend is to construct one storey plants, thus eliminating the need to raise and lower material between floors.
PRODUCTIVITY
Productivity is a measure of how much input is required to produce a given output, i.e., it is the ratio of output to input.
Factors affecting productivity ? Technology employed. ? Tools and raw materials used. ? Organization structure. ? Planning and scheduling of work. ? Plant layout. ? Innovations. ? Personnel policies. ? Work environment. ? Materials management. ? Skills of the workforce. ? Health, attitude towards workers, staff. ? Continuous training to the workers and staff. ? Proper maintenance of machines. ? Management Union relationship. ? Morale of the employees. ? Discipline. ? Transport and canteen facilities.
Techniques to improve productivity • • • • • Better planning and training of employees. Use of time and motion studies to study and improve work performance. Better transportation and material handling system. Providing work incentives and other benefits to workers. Involvement of workers in decision-making.
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Improvement in technology of production process. Simplification, standardization and specialization techniques like PERT, CPM. Better and efficient utilization of resources. Use of linear programming and other quantitative techniques. ABC analysis to identify more important items and then apply inventory control to reduce capital investments.
Measurement of productivity
1) Labour productivity =
amount of output
amount of labour
2) Capital productivity
=
sales turnover capital employed
3) Profit productivity
=
profit investment
BASICS OF JOB SCHEDULING
Detailed day-to-day planning of operations is called job scheduling. It deals with questions such as: ? Which work centers will do which job? ? When should an operation/job be started? When should it end? ? On which equipment should it be done, and by whom?
? What is the sequence in which jobs/operations need to be handled in a facility or on an equipment? The job-shop type of production system is more concerned with day-to-day planning. There would be a variety of jobs. Each job has a variety of operations to be performed. The variety of jobs and operations generate a multiplicity of semi-finished items which may have to wait for further operations to be done on them. When hundreds or thousands of such variations in operations –or-materials are to be handled, a systematic detailed daily plan is called for. Refer Diagram slide no. 118
BASICS OF ERP
1. Enterprise resource planning, popularly known as ERP, is today’s buzz word in the corporate world. Companies worldwide use ERP to integrate business processes and thereby reduce cost and increase productivity. 2. Businesses, non-profit organizations, nongovernmental organizations, governments and other large entities utilize ERP systems.
3. ERP is a software package developed for optimum use of resources of an enterprise in a planned manner. ERP integrates the entire enterprise starting from the supplier to the customer covering logistics, financial and human resources. ERP is a package for cost saving. Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain,Financials,Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System. Today ERP systems typically handle the manufacturing, logistics,distribution,inventory,shipping,invoicing, and accounting for a company. ERP software can aid in the control of many business activities, like sales,marketing,delivery,billing,production,inventory management, quality management, and human resource management.
Advantages
In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve: ? Design engineering (how to best make the product). ? Order tracking from acceptance to fulfillment. ? The revenue cycle from invoice through cash receipt. ? Managing interdependencies of complex bill of materials. ? Tracking the 3-way match between the purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced). ? Accounting for all these tasks, tracking the revenue, cost and profit at regular intervals.
Disadvantages ? ERP system is often operated by personnel with inadequate education in ERP in general. ? Customization of ERP software is limited. ? Reengineering of business processes to fit the “industry standard” prescribed by the ERP system may lead to loss of competitive advantage. ? ERP systems can be very expensive to install. ? ERPs are often so rigid and too difficult to adapt to the specific workflow and business processes of some companies. ? Systems can be difficult to use. ? Once a system is established, switching cost are very high. ? Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software. ? The system may be over-engineered relative to the actual needs of the customer.
BASICS OF PROJECT MANAGEMENT
A Project may be defined as a series of related jobs usually directed towards some major output and requiring a significant period of time to perform. Project Management can be defined as planning, directing and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of the project. A project plan can be considered to have five key characteristics that have to be managed: Scope: defines what will be covered in a project. Resource: what can be used to meet the scope. Time: what tasks are to be undertaken and when. Quality: the spread or deviation allowed from a desired standard. Risk: defines in advance what may happen to drive the plan off course, and what will be done to recover the situation. The sad thing about plans is you cannot have everything immediately. Any people plan using planning software packages, without realizing the tradeoffs that must be made. They assume that if they write the plan down, reality will follow their wishes. Nothing is further from the truth. The point of plan is to balance. The scope, and quality constraint against, The time and resource constraint, While minimizing the risks
Management of Projects 1. Planning – goal setting, defining the project, team organization 2. Scheduling – relates people, money and supplies to specific activities and activities to each other 3. Controlling – monitors resources, costs, quality and budgets; revises plans and shifts resources to meet time and cost demands.
Project Management Activities Refer Slide no. 128
The Role of the Project Manager Highly visible Responsible for making sure that: ? all necessary activities are finished in order and on time
? The project comes in within budget ? The project meets quality goals ? The people assigned to the project receive motivation, direction and information.
Project Characteristics • • • • • • • • • • • • • Project are Unique Projects have definite beginning and ending dates Projects are completed when the project goals are achieved It is focused on the customer and customer expectations. It is collection of activities, that are linked together to achieve certain results It is complex and involves different departments It has to be flexible to accommodate the changes It has many unknown factors & external influences It has cost constraints Involves risks Comprises many sub-projects Requires expertise in many fields Challenges Traditional line of authority
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Provides opportunity for learning Builds team spirit It consumes large resources It requires special control mechanism It is task & performance oriented It requires a task & performance oriented leader
METHOD STUDY
• Method Study and Work Measurement are the two basic techniques of work study. While Method Study aims to improve the existing methods of operations and procedures, work measurement helps to assess the human effectiveness. Though these two are distinctly separate techniques, they are very much interdependent. The application of both these techniques in adequate proportions based on the nature and type of problems would result in maximum benefits to the organisation. Method Study is essentially concerned with finding better ways of doing work. It is a technique of cost reduction. The philosophy of Method Study is, “there is always a better way” and the tools of Method Study are designed to systematically arrive at this “better way of doing a job”. Method Study can be applied to almost all types of work, whether it be a factory, electrical or any other type of activity. The scope of Method Study is not restricted to manufacturing industries alone, but extends to all other spheres. Methods improvement has been very successfully adopted in banks, hospitals, offices and retailing, in addition to defence, agriculture and all types of industries. There are various techniques which are suitable for tackling Method Study problems on all scales and for all types of work. There is no limit to the types of work which can be profitably studied. Another important aspect of Method Study is that often, with limited capital expenditure, it would be possible to obtain considerable economies in the use of resources and achieve large monetary savings. Method Study is the systematic recording and critical examination of existing and proposed ways of doing work, as a means of developing and applying easier and more effective methods and reducing costs. (Definition adopted in the B.S.Glossary of terms in Work Study.)
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? OBJECTIVES The objectives of Method Study are – i) Improve basic processes.
ii) Improve the design of plant and equipment. iii) Improve factory, office and work place layouts and handling of materials. iv) Improve the use of material, plant, equipment and power. v) Improve the working procedures. vi) Improve the working environment. vii) Improve quality
? METHOD STUDY PROCEDURE The analysis of problems for Method Study consists of an ordered and systematic procedure. This procedure involves six basic steps as follows: • • • • • • SELECT the work to be studied RECORD all relevant facts EXAMINE these facts critically DEVELOP the most effective, economical and practical method INSTALL the method as standard practice MAINTAIN the standard practice by regular checks
The above procedure is a logical one and is easy to follow in any type of work. Each of the steps is equally important and clearly defined. Faithful adherence to the basic procedure would result in achieving maximum results.
Selection of work for Method Study is the first step. The field of choice for Method Study is quite wide and every job is amenable to improvement. But the selection of the job should be based on scope and need for improvement, resulting economy, priority, objective and similar other considerations. Once the job has been selected, the next step is to record all the pertinent facts relating to the present or proposed method. There are a variety of recording techniques suitable for different types of situations. A proper recording is necessary since it forms the basis for further investigation. Critical examination is the crux of Method Study.
All these recorded facts are subjected to a thorough examination. Nothing is taken for granted and each activity is challenged with a view to get as many alternatives and improved methods as possible. All the alternative proposals thus obtained are evaluated and the most practical and economical method is developed. Considerable planning and preparation is necessary before the proposed method is installed. Full cooperation and participation from the Management, Supervisors and workers is essential for the implementation of the new method. A number of difficulties may crop up when the proposed method is under operation. There is also a tendency on the people to get back to the old methods with the slightest of excuses. Proper maintenance through routine and regular checks is an important factor in the Method Study procedure.
QUALITY CONTROL AND INSPECTION
• It is important that production process meets the quantity goals established in the production schedule, but it is of equal importance that the output meets the quality specifications as well. To manufacture products of desired quality, control over their quality must be exercised throughout the production and associated functions, including production planning, procurement and distribution. Quality considerations are present in every aspect of the production cycle – from the purchase of raw material to the customer. Monitoring all the quality level is usually assigned to a staff group that reports to the top management. Organizationally, this group is commonly referred to as Quality Control. The authority that quality control exercises varies according to the relative defect of controlling quality and to management assessment of the consequences of circulating the defective products. Since quality assurance enters into so many linkages within the production system, more support is needed from all levels of management than for most of the functions. No single department or staff can assure quality by itself. It takes cooperation of line workers, the supervisors and related staff organization. Quality assurance is a skill. Like other skills, if it is not continuously exercised, it will deteriorate. Also, it has been said that “quality is everybody’s concern.” But a job that belongs to everybody can easily become a job that nobody does.
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The overall value of the quality organisation should be judged by the ratio of cost incurred to cost saved, and not by the glamour of its own advertisements. • Cost of vigilance versus cost of error: In most production situations, the cost of vigilance and error varies inversely. Greater vigilance may take the form of extra time taken by individual worker, close supervision, additional test for products and inspection of all or portion of the output. The cost of error includes re-work, rejects and customer dissatisfaction. Somewhere
between the extremes of no vigilance and extra vigilance is a point where control over the magnitude of errors produces a minimum total cost. • Inspection versus quality control: Inspection is an act of comparing a product with accepted specifications or other recognized standards. The purpose of this inspection is to know where the product conforms to or does not conform to the specified quality limits expressed in the specifications. Units of the product found to conform are accepted; others are rejected.
Inspection is essentially a post-mortem operation performed on the product after it has been completely processed. As a screen operation, the purpose of inspection is to separate products into two classes: accepted and not accepted.
Inspection operation itself adds nothing to the value of the product. Hence, the inspection operation itself does not improve product quality and neither does it reduce rejections, since it involves no corrective action on the operation. • The problem is, how to guarantee a product of high quality to the customer and not burden the manufacturer with the loss of high percentage of rejections entailed by the inspection screening operation. The answer to this lies in quality control. Quality control is a system of inspection, analysis and action applied to a manufacturing process so that by inspecting a small portion of the product currently produced, an analysis of its quality can be made to determine what action is required on the operation to achieve and maintain the desired level of quality. In its broader application, quality control is a preventive tool and is used to minimize rejections to the end that all products and processes will meet the specified quality limits.
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Types of Inspection The two basic types of inspection are called “variables” and “attribute”. When precise measurements are made of dimensions, weight or other critical characteristics capable of expression on a continuous scale, the products are being subjected to variables inspection. The alternative to exact measurements is to set limits within which the product is judged acceptable or defective. A go-no-go rating results from an attribute inspection. Since a good or bad grading normally requires less time and skill to make and uses lower-cost equipment than exact measurements, attribute inspection is usually less expensive than variables inspection. • Precise measurements require closely calibrated devices, rulers, micrometers, scales, meters, etc., capable of measuring the product’s fineness standard. Devices to check attributes are designed to provide a quick verdict of acceptability – go-no-go gauges, snap gauges, templates, etc.
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Statistical sampling techniques frequently reduce inspection cost. The use of samples to replace 100% inspection is usually appropriate for machine output where units are not so likely to vary as are hand-crafted products. High production quantities and expensive inspections also suggest sampling. Then there is destructive testing (the performance test destroys the unit tested) which absolutely rules out 100% inspection. Statistical Quality Control:- The application of statistical techniques for measuring and improving the quality of product. It includes statistical process charts, diagnostic tools (pareto charts, flow charts, fishbone etc.), sampling plans & other statistical techniques.
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BASICS OF ISO 9000
• • • • • ISO is derived from the Greek work isos, meaning equal. ISO is a worldwide federation of national standard bodies from 178 countries. ISO 9000 is a series of standards that help organisations define and maintain a quality system. ISO is not a quality assurance system. ISO 9001.2008 deals with the requirements that organisation wishing to meet the standard have to fulfill The standards merely stipulate where organizations need documentation to validate processes and approaches but never dictates how much they require. The ISO 9000 standards basically have three requirements: The company must document quality system and business process in detail The company must make sure each employee understands and follows the guidelines put forth by the documentation. Documented quality system must be constantly monitored through internal and external audits, and changed or updated when necessary.
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Benefits of ISO9000 registration • • • • Higher perceived quality Improved customer satisfaction Reduced customer quality audits Better documentation
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Greater quality awareness Positive cultural change Increased efficiency and productivity Competitive edge
There are many standards in the ISO 9000 family including: • • • ISO 9001:2008 – sets out the requirements of quality management system ISO 9000:2005 – covers the basic concepts and language ISO 9004:2009 – focuses on how to make a quality management system more efficient and effective ISO 19011 – sets out guidance on internal and external audits of quality management systems
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ISO ? Does not impose additional requirements on your work processes. ? Does not require standardizing our work to confirm to another quality standard. ? Does requires us to document how we do our work and then follow our own instructions. All processes will be managed in accordance with the following ISO principles: ? Does not dictate how you should perform your work. ? Say what you do; ? Do what you say; ? Prove it!
BASICS OF ISO 14001
• • ISO 14001 latest version is 2004. It is a Environmental Management System addressing environmental issues.
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It is not mandatory and not customer driven. Organization has to decide whether it wants to self certify or get its system certified by an authorized body for authenticity. The company having ISO 14001 should define objectives and targets which are measurable and which can be monitored. The company will maintain manual as per ISO guidelines and should contain scope (dept or complete office), procedures (how to monitor, measures which will be take up), emergency plan, training to employees, roles and responsibilities of HOD’s, legal requirements, etc. In the HSE policy the company should make commitment towards preventing pollution, injury and ill-health in their operations by proactively addressing HSE concerns in their activities and services and make provision for continuous improvements..
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VALUE ENGINEERING AND VALUE ANALYSIS
What is Value Analysis? Value Analysis is: • • a task of finding a more economical way of making or buying a product a systematic, organized approach for attaining the same performance at lower cost (equivalent performance at reduced cost) an organized approach to a problem, drawing on all available sources of information and expert knowledge and coordinating the resulting data towards the objective of cost reduction a cost reduction programme to improve value / cost ratio of a product, material or service value engineering applied at the design stage itself a process of substitution to achieve cost reduction incidentally a means for interaction to take place in a controlled environment which minimizes conflict and maximizes results a method used for improving the product value by improving the relationship between the function of the product and its cost
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Objectives of Value Analysis i. ii. iii. To provide better value to a product / service To improve the company’s competitive position To ensure that every element of cost (labour, materials, suppliers and service) contribute proportionately to the function of the product.
Road Blocks to Value Analysis i. ii. iii. iv. v. We have done it this way for 15 years. Why change now? Our business is different We don’t do things that way in our firm It is jolly good idea. Let somebody else try it first It has been tried before – infact we do it all the times
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