 | PRODUCTION AND MATERIALS MANAGEMENT |
Ch9. PRODUCTION AND MATERIALS MANAGEMENT
Production management all the activities involving production, control, maintenance, improvement, and inspection.
Developing plans
Instilling and implementing those plans
Coordinating and controlling
9.1 Production Control
Production is the transformation of human and physical resources into products. The inputs are materials, energy, data, and funds. The outputs are either goods or services. Production control is a well-defined procedural system which coordinates the various elements of the production process (labor, materials, equipment) to achieve organizational goal. The type and degree of control are generally influenced by the nature of the industry.
Order Control adopted by manufactures who produce only on the basic of customers orders received (the intermittent process= production of short runs with interruptions or with retooling changes between operations)
Flow Control for manufactures who produce on a continuous basis in order to have stock available for immediate delivery. In contrast to order control, flow control generally requires constant use of the various production process inputs.
Graph of Gross National Product (World Almanac) 1870-50 1940 100 1980 2500
9.2 Production Control Procedures
Planning
Routing
Scheduling
Performance control
9.3 Manufacturing Process
Nature of Production
Extractive Process a process in which substances are taken from the earth or sea.
Analytic Process a process that breaks down a substance into other materials. All products from life forms.
Fabricating (or converting) Process when material is altered by being treated, machined, cut, stamped, sewn, and woven. Ex. -clothes
Synthetic (means to put together two and more elements) Process: glass, stainless steel, rayon
Assembly Process: TV sets, clocks, and cars. Put together 2 or mere elements, but elements are merely assembled (do not undergo a transforming change).
Time of Production
Some manufacturing processes are continuous and the manufacturing facilities continue to operate around the clock. Other are intermittent, in that facilities operate only for periods of time.
Character of Product
Standard Manufacture the manufacturer produces goods.
Custom Manufacture the customer specifies what to produce.
9.4 Production Management
Quality Control
Product Mix
Maintenance
Work Improvement achieving maximum operational efficiency through the reduction of time, effort, and cost. F.W. Taylors theory of scientific management is concerned with task simplification, improved equipment design, product control procedures, and a better work environment. The ultimate goal is establishing an atmosphere in which all inputs, human and mechanical, will work toward maximum output.
9.5 Materials Management
Raw material
Semifinished goods (parts of a larger assembly)
Finished goods (completed assembly, ready for sale)
Durable goods (or capital equipments/goods)the fixtures and equipment for long periods and become part of the physical plant of a business
Supplies goods that do not become a part of the manufacturing process but in one way make it possible.
Materials management involves purchase, storage and control, and transportation. Management includes specifying materials in quality and quantity needs, determining the best price and most reliable supplier, maintaining the flow of goods into manufacturing process and storing the unused stock, and transporting the finished products.
9.6 Purchasing Policies
To purchase what is needed when is needed, and to do so most economically, the purchasing department may follow any one of the following policies:
Make It or Bay It
Hand-to-Mouth Buying is purchasing small orders regularly over brief periods.
Forward Buying (can be speculative buying) the practice of ordering large amounts of supplies at frequent intervals
Contract Buying buying supplies from a supplier for a specified duration to ensure a constant supply at a favorable price
Auction Buying buying supplies from the supplier with the lowest big
Reciprocal Buying customer and supplier buy from each other
9.7 Purchasing Operations
Specifications - describing
Requisition material needs
Supplier Evaluation the optimum purchase agreement
Making the Purchase the purchase order is the written communication of all the details of the purchase to the supplier and serves as the commitment to the purchase.
9.8 Materials (Inventory) Control
MC is a systematic method of recording and reporting the movement of material throughout a company, from raw material in the stockroom through any of the various manufacturing processes, to finished product ready for shipment. Monitoring the movement of material through the various manufacturing processes also facilitates an evaluation of costs of each manufacturing step.
Holding cost a cost incurred by a firm for maintaining materials, including warehousing, depreciation, clerical work, labor, and insurance
Ordering cost the cost difference between large and small orders (small orders usually lose the advantage of discounts available for large orders).
Lead time the time difference between placing an order and receiving it.
Safety stock the amount of stock needed to maintain inventory until new stock is ordered and arrives; a protective cushion of inventory
Reorder system an organized and economically efficient method of determining when it is necessary to reorder raw materials or goods
Reorder point - the point at which the stock level is sufficient to cover the period before new stock arrives plus a reasonable amount of safety stock
Periodic reorder system since common raw materials are used regularly, they are reordered automatically at regular interval
Fig. Stock Level Changes over Three Reorder Cycles: Quantity Axis-Time Axis (Maximum Stock Level when Order Arrives, and Reorder Point Leaves when Enough Stock To Cover Demand during Lead Time, and Lead Time)
9.9 Plant Location
Where to locate
Production of a new line of goods
Opening facilities due to fire or any similar catastrophe
Natural deterioration or obsolescence
Increase in transportation costs or service
Labor supply or skills
Determining the most appropriate location
Within the general area (proximity to markets, market stability, proximity to resources such as raw materials, labor, and energy to operate the plant)
Within the specific vicinity (commutation facilities for workers, local attractiveness for management in tax structures, regulations, and restrictions; local attractiveness for workers for housing, schooling, shopping, and recreation)
For the plant location itself (cost of land property, power utilities immediately available and connectible, police and fire services available, suitability for expansion, vehicular access)
Some firms cluster in one location for several reasons (a large market), the location of certain industries is dictated by the location of their raw materials.
9.10 Plant Layout
PL is the studied placement of equipments, operations, workers, and work and storage spaces to effect the most efficient flow of activities between input raw materials and output finished products. It should be flexible.
Procedure-oriented layout
Product-oriented layout
Gantt chart a method for planning and controlling production scheduling using charts that plot several activities that are going on at the same time. Activities are plotted on the vertical axis while time sequences are horizontal bars which are plotted along a time scale corresponding to a calendar. Overlapping activities can be charted and a better use of machines and workforce can be effected.
Location analysis - an analysis of a plant site, from the point of view of geographic location, availability of energy and personnel before selection is made.
Manufacturing process the creation of economic value by changing the form of goods.
Perpetual inventory a reorder system that keep constant track of the materials used and according to which stock is replenished when the stock level falls to a predetermined reorder point
