Management MCO101 – Unit 10 – Oprations Management, Entrepreneurship, Innovation and Ethics

Cycle Times They Are A-Changin’
(to the melody of Bob Dylan’s “The Times They Are A-Changin’”)

Come gather round managers wherever you roam
And admit that the stockpile around you has grown
And accept it that soon cash will be all but gone
If payroll to you is worth making
Then you’d better start flowing or you’ll be sitting at home
Cycle times, they are a-changin’

Come accountants and IEs who analyze with your pens
And start your stop watches, takt time’s come again
And don’t stop it too soon, for the work’s just begun
And there’s no telling who’ll be there working
For the assembler now will be later be in paint
Cycle times, they are a-changin’

Come salesmen and rep people please heed the call
Don’t stack parts in the doorway, don’t block up the halls
For he that gets the parts will be he that has pulled
There’s a battle in the warehouse and it’s raging
It’ll soon hit your commission and worsen your golf
Cycle times, they are a-changin’

Come schedulers who expedite all over the plant
Don’t say it takes longer with high customer demand
The manufacturing process is beyond your command
Your inventory is rapidly aging
Please get off of the shop floor if you can’t lend a hand
Cycle times they are a-changin’

The line, it is loaded, the pace, it is takt
The slow assembler will later be fast
And the pull system now will start with the last
The orders we’re rapidly filling
The first piece out of test will surely pass
Cycle times, they are a-changin’

By Jon Miller

Operations management
Product (or service) management includes a wide range of management activities, ranging from the time that there’s a new idea for a product to eventually providing ongoing support to customers who have purchased the new product. Every organization conducts product management, whether it’s done intentionally or unintentionally.

The leading name in luxury watches, Rolex has been the pre-eminent symbol of performance and prestige for over a century.

The leading name in luxury watches, Rolex has been the pre-eminent symbol of performance and prestige for over a century.

How a product is developed or managed is depends very much on the nature of the organization and its products, for example, retail, manufacturing, wholesale, etc. Note that different people might even have different categorizations for the activities described below.

NOTE: Nonprofit organizations often provide services in the form of “programs”, rather than “products” — although the services from the programs are certainly “products” to groups of clients. Therefore, readers from nonprofit organizations might be better served to read the following guide HERE.

Operations Management : Managing the daily production of goods and services.
Key issue faced by Managers – Productivity

Operations management focuses on carefully managing the processes to produce and distribute products and services. Usually, small businesses don’t talk about “operations management”, but they carry out the activities that management schools typically associate with the phrase “operations management.”

Major, overall activities often include product creation, development, production and distribution. (These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product – that is, a product line. Operations management is in regard to all operations within the organization.) Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations.

A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.

Productivity
Productivity studies analyze technical processes and engineering relationships such as how much of an output can be produced in a specified period of time (see also Taylorism). It is related to the concept of efficiency. While productivity is the amount of output produced relative to the amount of resources (time and money) that go into the production, efficiency here is the value of output relative to the cost of inputs used. Productivity improves when the quantity of output increases relative to the quantity of input.

Efficiency improves, when the cost of inputs used is reduced relative the value of output. A change in the price of inputs might lead a firm to change the mix of inputs used, in order to reduce the cost of inputs used, and improve efficiency, without actually increasing the quantity of output relative the quantity of inputs.

A change in technology, however, might allow a firm to increase output with a given quantity of inputs; such an increase in productivity would be more technically efficient, but might not reflect any change in allocative efficiency.

Increases in productivity

Companies can increase productivity in a variety of ways. The most obvious methods involve automation and computerization which minimize the tasks that must be performed by employees. Recently, less obvious techniques are being employed that involve ergonomic design and worker comfort.

We have discussed already how a comfortable employee, can produce more than a counterpart who struggles through the day. In fact, some studies claim that measures such as raising workplace temperature can have a drastic effect on office productivity. Experiments done by the Japanese Shiseido corporation also suggested that productivity could be increased by means of perfuming or deodorising the air conditioning system of workplaces. Increases in productivity also can influence society more broadly, by improving living standards, and creating income. They are central to the process generating economic growth and capital accumulation. A new theory suggests that the increased contribution that productivity has on economic growth is largely due to the relatively high price of technology and its exportation via trade, as well as domestic use due to high demand, rather than attributing it to micro economic efficiency theories which tend to downsize economic growth and reduce labor productivity for the most part. Many economists see the economic expansion of the later 1990s in the United States as being allowed by the massive increase in worker productivity that occurred during that period. The growth in aggregate supply allowed increases in aggregate demand and decreases in unemployment at the same time that inflation remained stable. Others emphasize drastic changes in patterns of social behaviour resulting from new communication technologies and changed male-female relationships.

GDP highlighting differences inl economies

GDP highlighting differences in economies

Measurement of partial productivity refers to the measurement solutions which do not meet the requirements of total productivity measurement, yet, being practicable as indicators of total productivity.

In practice, measurement in production means measures of partial productivity. In that case, the objects of measurement are components of total productivity, and interpreted correctly, these components are indicative of productivity development. The term of partial productivity illustrates well the fact that total productivity is only measured partially – or approximately. In a way, measurements are defective but, by understanding the logic of total productivity, it is possible to interpret correctly the results of partial productivity and to benefit from them in practical situations.

Typical solutions of partial productivity are:

1. Single-factor productivity
2. Value-added productivity
3. Unit cost accounting
4. Efficiency ratios
5. Managerial control ratio system

Single-factor productivity refers to the measurement of productivity that is a ratio of output and one input factor. A most well-known measure of single-factor productivity is the measure of output per work input, describing work productivity. Sometimes it is practical to employ the value added as output. Productivity measured in this way is called Value-added productivity. Also, productivity can be examined in cost accounting using Unit costs. Then it is mostly a question of exploiting data from standard cost accounting for productivity measurements. Efficiency ratios, which tell something about the ratio between the value produced and the sacrifices made for it, are available in large numbers. Managerial control ratio systems are composed of single measures which are interpreted in parallel with other measures related to the subject. Ratios may be related to any success factor of the area of responsibility, such as profitability, quality, position on the market, etc. Ratios may be combined to form one whole using simple rules, hence, creating a key figure system.

The measures of partial productivity are physical measures, nominal price value measures and fixed price value measures. These measures differ from one another by the variables they measure and by the variables excluded from measurements. By excluding variables from measurement makes it possible to better focus the measurement on a given variable, yet, this means a more narrow approach. The table below was compiled to compare the basic types of measurement. The first column presents the measure types, the second the variables being measured, and the third column gives the variables excluded from measurement.

Comparison of basic measure types (after Saari 2006)

Comparison of basic measure types (after Saari 2006)

Productivity paradox

Robert Solow once stated that “Computers are everywhere but in the productivity numbers.” There seems to be a productivity paradox associated with computers; their use has proliferated, yet there have not been any observable increases in productivity as a result. One hypothesis to explain this is that computers are productive, yet their productive gains are realized only after a lag period, during which complementary capital investments must be developed to allow for the use of computers to their full potential.

Another hypothesis states that computers are simply not very productivity enhancing because they require time, a scarce complementary human input. This theory holds that although computers perform a variety of tasks, these tasks are not done in any particularly new or efficient manner, but rather they are only done faster. It has also been argued that computer automation just facilitates ever more complex bureaucracies and regulation, and therefor produces a net reduction in real productivity Berglas (2008). Current data does not confirm the validity of either hypothesis. It could very well be that increases in productivity due to computers is not captured in GDP measures, but rather in quality changes and new products.

Quality

Quality is a perceptual, conditional and somewhat subjective attribute. The common element of the business definitions is that the quality of a product or service refers to the perception of the degree to which the product or service meets the customer’s expectations. In technical usage, quality can have two meanings:

1. the characteristics of a product or service that bear on its ability to satisfy stated or implied needs;

2. a product or service free of deficiencies. According to Joseph Juran, quality means “fitness for use;” according to Philip Crosby, it means “conformance to requirements.”

Quality has no specific meaning unless related to a specific function and/or object. “Qualia” (pronounced /ˈkwɑːliə/) is “an unfamiliar term for something that could not be more familiar to each of us: the ways things seem to us”. They can be defined as qualities or sensations, like redness or pain, as considered independently of their effects on behavior and from whatever physical circumstances give rise to them. In more philosophical terms, qualia are properties of sensory experiences.

As an idea it has countable and uncountable associations. An uncountable notion of quality concerns the concept – ‘Level of excellence’.

Example
: This school is well-known for having teachers of high quality.
Quality of life is usually determined by health, education, and income.

The Economist Intelligence Units quality-of-life index is based on a unique methodology that links the results of subjective life-satisfaction surveys to the objective determinants of quality of life across countries. The results of the surveys seem to indicate that an interplay of modernity and tradition is essential in determining life satisfaction. Ireland, which took the top slot, successfully combines the most desirable elements of the new—material wellbeing, low unemployment rates, political liberties—with the conservation of certain satisfaction-enhancing, or modernity-cushioning, elements of the old, such as stable family life and the preservation of community.

The uncountable notion of ‘quality’ contrasts with a countable notion of quality such as when it is used to dictate a property or attribute that differentiates a thing or person, a product or a service. Tangible or intangible.

Example
: One of the qualities of pure iron is that it does not rust easily.

Example: While being impulsive can be great for artists, it is not a desirable quality for engineers.

Example: Security, stability, and efficiency are good qualities of an operating system.

A further uncountable definition is “The degree to which a man-made object or system is free from bugs and flaws, as opposed to scope of functions or quantity of items.” (source: Wiktionary)

There are two major forms of researching objects or ‘things’ and people, or their interaction. Qualitative research is a field of inquiry that crosscuts disciplines and subject matters. Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern human behavior. Qualitative research relies on reasons behind various aspects of behavior. Simply put, it investigates the why and how of decision making, not just what, where, and when.

see an explanation of why, what, where and when HERE

Quantitative research
is the systematic scientific investigation of quantitative properties and phenomena and their relationships. The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to natural phenomena. The process of measurement is central to quantitative research because it provides the fundamental connection between empirical observation and mathematical expression of quantitative relationships. Quantitative research is widely used in both the natural sciences and social sciences, from physics and biology to sociology and journalism.

Properties of things and people, their relations, and classes are supposed to be abstract, rather than concrete. Many philosophers say that properties and relations have an abstract existence, and that physical objects have a concrete existence. That, perhaps, is the paradigm case of a difference in ways in which items can be said to be, or to have being.

Space and Time

Space and time are what physical objects are extended into. There is debate as to whether time exists only in the present or whether far away times are just as real as far away spaces, and there is debate as to whether space is curved. Many contemporary thinkers actually suggest that time is the fourth dimension, thus reducing space and time to one distinct ontological entity, the space-time continuum.

Classes

We can talk about all human beings, and the planets, and all engines as belonging to classes. Within the class of human beings are all of the human beings, or the extension of the term ‘human being’. In the class of planets would be Mercury, Venus, the Earth, and all the other planets that there might be in the universe. Classes, in addition to each of their members, are often taken to be beings. Surely we can say that in some sense, the class of planets is, or has being. Classes are usually taken to be abstract objects, like sets; ‘class’ is often regarded as equivalent, or nearly equivalent, in meaning to ‘set’. Denying that classes and sets exist is the contemporary meaning of nominalism.

The Pioneer spacecraft were the first human-built objects to leave the solar system. They had plaques are a pair of gold anodized aluminum plaques which were placed on board the 1972 Pioneer 10 and 1973 Pioneer 11 spacecraft, featuring a pictorial message from humanity, in case either Pioneer 10 or 11 are intercepted by extraterrestrial beings. Critics have argued that the message is too anthropocentric and too hard to understand. Although the message was designed to encode the most information possible in minimal space, rather than to be easily readable, very few of the scientists that were shown the message were able to decode all of it.

The Pioneer spacecraft were the first human-built objects to leave the solar system. They had plaques are a pair of gold anodized aluminum plaques which were placed on board the 1972 Pioneer 10 and 1973 Pioneer 11 spacecraft, featuring a pictorial message from humanity, in case either Pioneer 10 or 11 are intercepted by extraterrestrial beings. Critics have argued that the message is too anthropocentric and too hard to understand. Although the message was designed to encode the most information possible in minimal space, rather than to be easily readable, very few of the scientists that were shown the message were able to decode all of it.

Properties

In modern philosophy, mathematics, and logic, a property is an attribute of an object; thus a red object is said to have the property of redness. The redness of a red apple, or more to the point, the redness all red things share, is a property. One could also call it an attribute of the apple.

Very roughly put, a property is just a quality that describes an object. This will not do as a definition of the word ‘property’ because, like ‘attribute’, ‘quality’ is a near-synonym of ‘property’. But these synonyms can at least help us to get a fix on the concept we are talking about. Whenever one talks about the size, color, weight, composition, and so forth, of an object, one is talking about the properties of that object. Some – though this is a point of severe contention in the problem of universals – believe that properties are beings; the redness of all apples is something that is. To deny that universals exist is the scholastic variant of nominalism.

Propositions

Propositions are units of meaning. They should not be confused with declarative sentences, which are just sets of words in languages that refer to propositions. Declarative sentences, ontologically speaking, are thus ideas, a property of substances (minds), rather than a distinct ontological category. For instance, the English declarative sentence “snow is white” refers to the same proposition as the equivalent French declarative sentence “neige est blanc“; two sentences, one proposition. Similarly, one declarative sentence can refer to many propositions; for instance, “I am hungry” changes meaning (i.e. refers to different propositions) depending on the person uttering it.

Relations

An apple sitting on a table is in a relation to the table it sits on. So we can say that there is a relation between the apple and the table: namely, the relation of sitting-on. So, some say, we can say that that relation has being. For another example, the Washington Monument is taller than the White House. Being-taller-than is a relation between the two buildings. We can say that that relation has being as well. This, too, is a point of contention in the problem of universals.

Category came into use with Aristotle’s essay Categories, in which he named 10 categories:

* substance
* quantity
* quality
* relation
* place
* time
* posture
* possession/habit
* action
* passion (receiving)

Nowadays, these categories are commonly seen as having a value that is merely historical, in part because Aristotle’s notion of substance is commonly rejected. This rejection often stems from a misunderstanding of his real meaning, which was that substance is that which exists of itself and not in another.

In special relativity, the term; ‘invariant mass’ means the same as if we would say; (Aristotle’s)substance of mass. The difference being that, ‘substance’ may be used to describe properties of several other concepts than mass.

Given this understanding, to deny that substance exists amounts to saying that everything exists in another, which in turn implies that nothing exists. But if we assume that things do in fact exist, then at least one substance must be admitted, unless we allow things to nest in other things in either an infinite or a circular fashion. The latter option seems rather implausible, but the former option is conceivable if matter is assumed infinitely divisible, i.e., if atoms are denied.

Other systems of categories

In his Critique of Pure Reason, Kant proposed the following system:

* Quantity
o Unity
o Plurality
o Totality
* Quality
o Reality
o Negation
o Limitation
* Relation
o Inherence and Subsistence (substance and accident)
o Causality and Dependence (cause and effect)
o Community (reciprocity)
* Modality
o Possibility
o Existence
o Necessity

Charles Peirce, who had read Kant closely and who also had some knowledge of Aristotle, proposed a system of merely three phenomenological categories: Firstness, Secondness, and Thirdness, which he repeatedly invoked in his subsequent writings. Edmund Husserl (1962, 2000) wrote extensively about categorial systems as part of his phenomenology.

Quality in business and manufacturing

In the manufacturing industry it is commonly stated that “Quality drives productivity.” Improved productivity is a source of greater revenues, employment opportunities and technological advances. However, this has not been the case historically, and in the early 19th century it was recognised that some markets,such as those in Asia, preferred cheaper products to those of quality[13] Most discussions of quality refer to a finished part, wherever it is in the process. Inspection, which is what quality insurance usually means, is historical, since the work is done. The best way to think about quality is in process control. If the process is under control, inspection is not necessary.

The objective of this standard is to provide a framework for the evaluation of software quality. ISO/IEC 9126 does not provide requirements for software, but it defines a quality model which is applicable to every kind of software. It defines six product quality characteristics and in an annex provides a suggestion of quality subcharacteristics.

The objective of this standard is to provide a framework for the evaluation of software quality. ISO/IEC 9126 does not provide requirements for software, but it defines a quality model which is applicable to every kind of software. It defines six product quality characteristics and in an annex provides a suggestion of quality subcharacteristics.

However, there is one characteristic of modern quality that is universal. In the past, when we tried to improve quality, typically defined as producing fewer defective parts, we did so at the expense of increased cost, increased task time, longer cycle time, etc. We could not get fewer defective parts and lower cost and shorter cycle times, and so on. However, when modern quality techniques are applied correctly to business, engineering, manufacturing or assembly processes, all aspects of quality – customer satisfaction and fewer defects/errors and cycle time and task time/productivity and total cost, etc.- must all improve or, if one of these aspects does not improve, it must at least stay stable and not decline. So modern quality has the characteristic that it creates AND-based benefits, not OR-based benefits.

The most progressive view of quality is that it is defined entirely by the customer or end user and is based upon that person’s evaluation of his or her entire customer experience. The customer experience is the aggregate of all the touch points that customers have with the company’s product and services, and is by definition a combination of these. For example, any time one buys a product one forms an impression based on how it was sold, how it was delivered, how it performed, how well it was supported etc.

Manufacture and product and service quality

Business has tried to define quality in a producer-consumer context, with the following variations:

1. ISO 9000: “Degree to which a set of inherent characteristic fulfills requirements.”[2] The standard defines requirement as need or expectation.
2. Six Sigma: “Number of defects per million opportunities.”[3] The metric is tied in with a methodology and a management system.
3. Philip B. Crosby: “Conformance to requirements.”[4][5] The difficulty with this is that the requirements may not fully represent customer expectations; Crosby treats this as a separate problem.
4. Joseph M. Juran: “Fitness for use.”[5] Fitness is defined by the customer.
5. Noriaki Kano and others, presenting a two-dimensional model of quality: “must-be quality” and “attractive quality.”[6] The former is near to the “fitness for use” and the latter is what the customer would love, but has not yet thought about. Supporters characterize this model more succinctly as: “Products and services that meet or exceed customers’ expectations.”
6. Robert Pirsig: “The result of care.”[7]
7. Genichi Taguchi, with two definitions:

a. “Uniformity around a target value.”[8] The idea is to lower the standard deviation in outcomes, and to keep the range of outcomes to a certain number of standard deviations, with rare exceptions.
b. “The loss a product imposes on society after it is shipped.”[9] This definition of quality is based on a more comprehensive view of the production system.

8. American Society for Quality: “a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings:

a. the characteristics of a product or service that bear on its ability to satisfy stated or implied needs;
b. a product or service free of deficiencies.”[5]

9. Peter Drucker: “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.”[10]

Total quality management

At its core, Total Quality Management (TQM) is a management approach to long-term success through customer satisfaction.

In a TQM effort, all members of an organization participate in improving processes, products, services and the culture in which they work.

The methods for implementing this approach come from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran.

A core concept in implementing TQM is Deming’s 14 points, a set of management practices to help companies increase their quality and productivity:

1. Create constancy of purpose for improving products and services.
2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.
5. Improve constantly and forever every process for planning, production and service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for management.
12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
13. Institute a vigorous program of education and self-improvement for everyone.
14. Put everybody in the company to work accomplishing the transformation.

The term “Total Quality Management” has lost favor in the United States in recent years: “Quality management” is commonly substituted. “Total Quality Management,” however, is still used extensively in Europe.


General
Information

ASQ
Inforsearch and APQ InfoCenter
,
ASQ (Searchable database of articles)

BPR
Online Learning Center – Reenginering
, ProSci

*
Customer
Focused Quality:David Butler Associates

Deming
Web Site — File Archive
,
Tom Glenn & Del Kimbler, Deming Electronic Network Website

DOD
Guidelines on Data Quality Management (Summary)
,
Defense Information Systems Agency

Glossary
of Terms
, Wizdom Systems Inc.

The
Government Division
, American Society for Quality

Guide
To Total Quality Management: An Annotated and Selective Guide to TQM
,
Anne Lund & Lise Ingemann Mikkelsen, The Royal School of Library and Information
Science in Denmark, Copenhagen

Handbook
for Process Improvement
, Navy Total Quality Leadership Office (.pdf file)

In
Their Own Words
, Denise Lindsey Wells Director, Executive Support Division
Department of the Navy Total Quality Leadership Office (.pdf file)

Introduction
to Quality Improvement
, Engineering Science 130, Vanderbilt University.

Juran
Article Index
,
Juran Institute

*
Product
Development Library: Total Quality Management (TQM)
: John Stark (Listing
of books on Quality Management)

Public
Sector Continuous Improvement Site
,
Department of Industrial Engineering, Clemson University

Small
Business Guidebook to Quality Management
: Office of the Secretary of Defense

*
Total
Quality Management
: ToolBase Services, National Association of Home Builders

Total
Quality Management in Libraries
:
Denise G. Masters, Eric Digest


TQM BBS Files,
Clemson Engineering CQI


Small
Business Guidebook to Quality Management
, Office of the Secretary of Defense
(.pdf file)

Statistical
Process Control (SPC)
, Quality Training Supplies

W.
Edwards Deming
, MIT

General
Information
| Quality Tools | ISO 9000
| Organizations | Award Programs | Top


Quality
Tools

*
7
Helpful Charts
: James W. Van Wormer, Ph.D.

Benchnet,
Benchmarking Exchange (Benchmarking and Best Practices network)

*
CQI/TQM
Tools
, Society for Health Systems

Management
Tools
,
Skymark Corporation

Quality
Control Tools
,
Clemson University

**The
Quality Tools Cookbook
, Prof. Sid Sytsma & Dr.Katherine Manley, Ferris
State University


Service quality

Today?s economy is getting more service oriented and we live in a service society. The service sector has experienced a great development, which has implied and implies greater competition. The customers have a wider range of services to choose among and as a service provider, it is all about providing a superior service. However, being a service provider can sometimes imply a hard undertaking. Sometimes the service provider does not accomplish to provide the service perfectly. These situations are more known as service failures. Service recoveries are often used to recover service failures, which can e.g. imply an apology or offering the customer something extra at no cost.To be able to act correctly in a service recovery situation, a com-pany can e.g. have a service recovery policy for how to act in service failure situations. A company can also choose to empower the front-line employees who interact frequently with the customers.

A thesis which explores this issues HERE

Manufacturing Operations

Amount of Processing

Make-to-order operations – manufacturing doesn’t begin until an order is placed
Assemble-to-order operations – used to create semi-customized products
Make-to-stock operations – manufacture standardized products

Traditional production systems produce products and stock them as inventory until they are sold (make-to-stock). In order to reduce inventory and increase the level of customization, some firms have designed their production systems to produce a product only after it is ordered. Such systems are referred to as make-to-order.

Make-to-order systems are not appropriate for all types of products, and the make-to-order versus make-to-buy decision must be weighed carefully. The following are some factors to consider when evaluating the prospect of make-to-order:

* Value of a custom product: Are customers willing to pay more for customization?

* Customer patience: Are customers willing to wait for a custom product to be manufactured and delivered? If not, the cost of losing the customer to the competition is the margin on the product, plus the value of any future purchases that may be lost as a result of the customer’s switching to the competition. Even if the customer switches to another model from the same firm, a loss of goodwill may result.

* Cost of stockouts: Assuming the customer is patient enough to wait the specified delivery time, make-to-order eliminates the problem of stock-outs. If stock-outs are estimated to have a relatively large cost associated with them, make-to-order becomes more attractive.

* Inventory holding costs: Does the product lose its value quickly? Is it easily damaged? Do customers demand a high level of variety (and therefore higher inventory costs)? Make-to-order becomes more attractive as inventory holding cost increases.

* Modularity: If the product is modular, component inventory costs can be reduced since less safety stock is required.

* Manufacturing lead time: A long lead time may render a make-to-order system infeasible if the customers are not willing to wait.

* Manufacturing set-up costs: If set-up costs are high, make-to-order might incur too large a cost penalty relative to the benefits of customization. Automated flexible manufacturing systems help to reduce set-up costs.

See HERE for more

Assemble-to-order is a manufacturing strategy where parts and sub-assemblies are produced-to-stock, while the final assembly of products is delayed until customer orders have been received. Customer orders may require the assembly of different sets of items (components). For example, a computer manufacturer such as Dell receives a variety of different orders which consist of different size monitors, different capacity hard drives, different keyboard types and so on. These orders are then assembled from available stocks of parts. In manufacturing systems where:

* components production times are relatively large compared to assembly times; and;
* considerable commonality of components exists among orders (products), the assemble-to-order strategy is more likely to emerge (Gerchak and Henig, 1989).

This strategy allows manufacturers to achieve a high degree of product variety and quick product delivery while keeping low inventories.

See also HERE and HERE

Characteristics of a Make-to-Stock (MTS) process are commodity based end products, production prior to sales order based on forecast, end products sold from inventory, controlling of inventory is critical and distribution and warehousing of end product is the norm.
Flexibility of Manufacturing

Continuous-flow production-Produces products continuously, like oil drilling

A production process in which a unit undergoes each stage of production sequentially. The unit remains at the first stage until that particular segment is complete; it is then sent to the next stage, where the process is repeated. This method continues until the unit has completed all sequences of the production process.

Line-flow production-Uses predetermined, linear steps, like beverage bottling

Line flow monitoring via IT

Line flow monitoring via IT

Batch production-Produces specific quantities of different items, like a bakery or commissary

As businesses grow and production volumes increase, the production process is often changed to a “batch method”. Batch methods require that a group of items move through the production process together, a stage at a time.

For example when a bakery bakes loaves of wholemeal bread, a large ball of wholemeal dough will be split into several loaves which will be spread out together on a large baking tray. The loaves on the tray will then together be cooked, wrapped and dispatched to shelves, before the bakery starts on a separate batch of, for example, crusty white bread. Note that each loaf is identical within a batch but that loaves can vary from batch to batch.

Batch production is a very common method of organising manufacture. Good examples include:

* Production of electronic instruments
* Fish and chip shops
* Paint and wallpaper manufacturers
* Cereal farming

The batch method can be an advantage for businesses that produce a range of products. It is cheaper to produce a number of each item in one go because machines can be used more effectively, the materials can be bought in bulk and the workers can specialise in that task. There are two particular advantages of workers being able to concentrate their skills.

* They should become more expert at their tasks, which will in turn increase productivity (output per worker). This will lower costs, as fewer workers are needed to produce a set amount.
* Better quality products should be produced as workers are more familiar with the task and so can find ways of improving it.

Batch production requires very careful planning to decide what batch will be produced when. Once a batch is in production it is difficult to change, as switching to another batch takes time and will mean a loss of output. Batch methods can also result in the build up of significant “work in progress” or stocks (i.e. completed batches waiting for their turn to be worked on in the next operation). This increases costs as it takes up space and raises the chance of damage to stock.

More on batch production HERE
Job shops-Handle small, specialty batches

Job shops are typically small manufacturing operations that handle specialized manufacturing processes such as small customer orders or small batch jobs. Job shops typically move on to different jobs (possibly with different customers) when each job is completed. By nature of this type of manufacturing operation, job shops are usually specialized in skill and processes. In computer science the problem of job shop scheduling is considered strongly NP-hard.

A typical example would be a machine shop who makes components for the aerospace industry. Most parts on airplanes are made in relatively small quantities compared to iPods. Other types of common job shops are grinding, honing, jig-boring, and gear manufacturing shops.

The opposite would be continuous flow manufactures such as textile, steel, and food manufacturing.

Project manufacturing-Is for large, expensive, specialized products like aircraft carriers

Innovation

A range of social contexts temper human decisions hich, in turn, shape technology in the market economy. The term innovation may refer to both radical and incremental changes in thinking, in things, in processes or in services (Mckeown, 2008). Invention that gets out in to the world is innovation. In many fields, something new must be substantially different to be innovative, not an insignificant change, e.g., in the arts, economics, business and government policy. In economics the change must increase value, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy.

We have had five successive technological revolutions in the last 200 years, from the industrial to coal and steam to steel and electricity to oil and petro-chemicals to information and, in each successive one, a new techno-economic and also social context has invariably emerged. However, given the West’s love affair with a rationalistic and technological approach, and contrary to historical evidence, too often attention and emphasis is given to the technological and economic aspects of change and not to the social aspects. This is a time when managers and leaders need to innovate effectively if they run an enterprise. A growing number of business leaders and a growing number of government leaders have come off of two decades of trying to find greater efficiencies in new forms of business process reengineering to do the old things we used to do much more effectively, much more efficiently, and to get massive improvements in productivity.

Any good innovation exercise should begin with diagnostics. Not with thinking out of the box, but with a specific attempt to identify the emerging market needs, the new sources of value that might come from technologies, the errors of omission by our own firm or specifically by our competitors in a field. These are the things that give you the insights that you need to concentrate the time, energy, and talent of a team inside of an enterprise and to get it to have some chance of producing something that is (a) needed by customers, (b) overlooked by competitors, and (c) reasonably possible inside the corporation itself. And that’s how you get to innovations that start to make a big difference.

Innovation takes what is given and makes it more

Innovation takes what is given and makes it more

Books on Innovation by Eric Von Hippel HERE and HERE

Have a look at these tips HERE

S-Curves and Technological Innovation

Everett M. Rogers in his 1962 book, Diffusion of Innovations, theorized that innovations would spread through society in an S curve, as the early adopters select the technology first, followed by the majority, until a technology or innovation is common. According to Rogers, diffusion research centers on the conditions which increase or decrease the likelihood that a new idea, product, or practice will be adopted by members of a given culture. According to Rogers people’s attitude toward a new technology is a key element in its diffusion. Roger’s Innovation Decision Process theory states that innovation diffusion is a process that occurs over time through five stages: Knowledge, Persuasion, Decision, Implementation and Confirmation. Accordingly, the innovation-decision process is the process through which an individual or other decision-making unit passes 1. from first knowledge of an innovation, 2. to forming an attitude toward the innovation, 3. to a decision to adopt or reject, 4. to implementation of the new idea, and 5. to confirmation of this decision. (Rogers, 2003, p. 161)

The basic idea is that in technology performance (in terms of sales, features, speed, etc.) increases with increased effort but eventually hits an upper limit or plateau where further improvement would either be impossible or prohibitively expensive. To achieve a higher performance requires a discontinuous switch to a different technology, which in turn follows its own S-curve. The new S-curve may well start at a performance level below that of the old one, but it has the potential to overtake its predecessor.

A breakthrough is when the performance limits of an existing device or method are exceeded by a new, different device or method. The key word: different.
As technology evolves, a given device or method will reach a point when it can no longer be improved. At this point it has reached the limits of its underlying physical principles. To exceed this performance limit, a totally different device or method with different underlying physical principles is required.
Examples:

*The limits of sailing ships were exceeded with steam ships.
*The speed limits of propeller aircraft were exceeded by jet aircraft
*The altitude limits of aircraft were exceeded by rockets
*The travel limits of rockets will be exceeded by… (to be determined)

The S-Curve figure illustrates both the evolution of a given technology, and the breakthrough event when a new, superior technology becomes viable. For a given technology, the evolution is as follows: Initial efforts result in little advancement and then the technology becomes successful. This success point, at the lower knee of the curve, is where the technology has finally demonstrated its utility. After this point significant progress and improvements are made as several embodiments are produced and the technology becomes widely established. Eventually, however, the physical limits of the technology are reached, and continued effort results in little additional advancement.

This evolution (effort expended versus performance gains) takes the form of an S-Curve. To go beyond the limits of the top of a predecessor’s S-Curve, a new alternative must be created. This new alternative will have its own S-curve and will eventually require yet another new approach to surpass its performance limits. The breakthrough event, is when the new method demonstrates its viability to exceed past the limits of its predecessor.

Paradoxically, it is at the point of diminishing returns of an existing technology when it is most difficult to consider alternatives. Institutions that grow up with a technology become too established, too uniquely adept at their technology to consider alternatives. Alternatives are outside their area of expertise. Established institutions prefer to modify, augment or find new applications for their technology rather than to search for ways to go beyond their technology. Historical evidence shows that this refinement approach does not guarantee sustained market superiority (Innovation, the Attacker’s Advantage, R. Foster, 1986). If an existing organization wants to avoid its own obsolescence, it must be willing to explore alternatives.

Steam ships were not created by mastering the technologies of sails and riggings. Jet aircraft did not result from mastering piston-propeller aircraft. Transistors were not invented by mastering vacuum tubes. Photocopiers did not result from mastering carbon paper. And breakthrough space drives will not be created by mastering rocket engines.

The work style of pioneering for alternatives is different than the style for building mastery. The main emphasis of day-to-day engineering is to be a master of your chosen technology. Mastery is achieved through continuous improvements; refining, augmenting and finding new applications while sustaining expertise throughout this process. The work style depends on established knowledge and tends to be systematic, relatively predictable, and has a relatively short-term return on investment.

Creating new and superior technologies, however, is a wholly different type of work. Going beyond the limits of an existing technology requires a pioneering spirit. It requires imagination to envision future possibilities. Pioneering requires confronting ignorance and creating new knowledge rather than just apply existing knowledge. It requires intuition and subjective judgments to navigate in the absence of an established knowledge base. And because progress is unpredictable and the returns on investment are long-term, it requires the ability to take risks.

An explanation of the s-curve and inovation is HERE

To view slides full page or to download them click HERE.

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