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Production Planning and Control

Chapter 1

Production System and Operations Strategy

Junfeng Wang
Assoc. Prof. , PhD., Department of Industrial and Manufacturing System Engineering, Huazhong University of Science and Technology

Basic conception Production system and its classification Organization of production system Operations Management &Operations Strategy The Classical View of Operations Strategy Modern Operations Strategy and Competition Matching Process and Product Life Cycles Capacity Growth Planning


1.1 Basic conception

Task of enterprise
Through production activities, with less inputs, obtain more product outputs to gain economic and social benefits

Overall Business Strategy

The market in which the enterprise competes The level of investment The means of allocating resources to and integrating of separate business units

The activities of enterprises 1. Decision activities: 2. Technology activities: 3. Supply activities: 4. Manufacturing activities: 5. Sales activities: 6. Financial activities:

2-4 is production activities


Task of Production & Operations Management

Production activities in enterprises are

Dependent connected mutually and tightly Enterprise can hardly achieve its purpose without correctly organizing activities .

The task of Production and Operation Managements:

Organizing the production activities reasonably, making good use of the resources efficiently for the purposes as follows: Complete the product production Achieve the business objective Reduce cost, improve quality and reduce production time (cycle) Promote production systems flexibility

1.2 Production system

System view: An enterprise is a large system. A production system is a subsystem of the whole enterprise system, and its main function is producing products.
A production system: uses operations resources to transforms inputs into some desired outputs.

Production system




Materials, Capital Demand, Information, Energy

feedback Decision


customer output
End products, services

Manufacturing Assembling Storing, Service Transportation

Resource: People, Plants, Parts, Process, PPC


Inputs-transformation -outputs
System Primary inputs Resources

Primary transform ation

manufactur ing and assembling distributio n

Desired outputs

automobile plant

steel, power parts, other materials goods

facilities, and workers storage tools

cars with high quality instant delivery


wholesale center

Elements of production system 1. Structure Elements framework of production system

Technology, e.g. Process Technology and combination of equipment Facility, e.g. scale and layout of Facilities Capacity, e.g. The capacity and flexibility of production Integratione.g. inner-integrationouter-integration

2. Non-structure elements : elements that support and

control system function
Personnel organization Production planning Production control Production inventory Quality management

Classification of production system

1. Classified based on production process continuity:
Continuous flow production system Discrete production system

2. Classified based on customization :

make to stock production for order

3. Classified based on industry :

manufacturing industry service industry


Continuous flow production system (1)

The key of Continuous flow production system : Emphasize on aggregate production planning and facility maintenance. Typical industry: chemistry industry, plastics, pharmacy, fossil oil, metallurgy, spinning, beverage


Continuous flow production system (2) Characteristics:

1. The production process is relatively steady.

2. Customers are usually organizations,

3. The standardization of products is high 4. Few product sorts 5. The facility is highly automatized, highly specialized and expensive 6. The facility failure can bring in great loss, so the equipment maintenance is very important

Discrete production system (1)

1. discrete products, affected by customers greatly, the markets is not so steady. 2. The products is complex, many parts and components 3. Production process is required to cooperate with many departments. 4. short product life cycle, products are changed quickly (since customers demands change continually). 5. High customization proportion 6. production and operations management are complex.

Many methods in IE aimed at this type of production.


Discrete production system (2)

Different type of products needs different production process, needs different layout of equipments. Product change, layout changes The production proportion of different type of products often changes, so workforce organizing, equipments arranging , production scheduling are very difficult and needs to adjust continuously. The requirement of production capacity is dynamic, the load-balance and the synchronization of production process are very difficult but necessary.

Annual plan is usually inaccurate, while short plans (monthly/weekly) are the keys.

Difference of two production systems

Primary characteristic
Customer amount Product sorts Product standardization Customization Demand

Continuous flow
few few high low steady

many many low high Change


Difference: facility and manufacturing aspects

Primary characteristic
Production elements Autoimmunization level Logistic facility failure equipment maintenance The types of material Energy consumption WIP Product inventory Output flexibility product structure flexibility operation information collecting

Continuous flow
High dense Capital high continuous great effect High requirement few high low high low Low easy

High dense workforce Low comparatively discontinuous effect Low many Low comparatively high low high high difficulty


Classified of discrete production system Discrete production system is classified into:

Mass production Multi-products and low volume production One of a kind production


Mass production (1)

Only a few types of products are produced repeatedly in a long period.

e.g. watches, bicycles, TV, refrigerator, DVD, screw

Characteristics: (1) High productivityworkers are designated to a work with high specializationand equipments and process are high specialized. (2) Skilled workers: workers repeat the same operations.

(3) Simple production planning and scheduling : once a production line is set up properly, it will keep going on some rhythm.

Mass production (2)

(4) The products quality is easy to be guaranteed. (5) Low production cost.

Management emphasis: facility maintenance, worker management, quality management


Multi-product and low volume production (1)

low volume, low production stability the high productivity special equipments can not be used there are many products in production at the same time so that the management is very complex. e.g. bus , car, elevator


Multi-product and low volume production (2)

Management emphasis :
optimize product mix to pursue the largest economic benefits after satisfying the market demand and production resources constraints. use the GT production cell, and production line, improve the connection between processes. arrange reasonably the product kind, quantity and interval to produce products in batches and in turns. control and balance WIP, logistic and product inventory

One of a kind production (1)

organize production after receiving order. e.g. shipbuilding, airplane making

(1) different kind of products needs different production process. (2) every order has only one or several quantity, with difference delivery time. (3) general equipments are required, which need a long adjustment period with low efficiency to different product (4) workers are also required to be generalists.

One of a kind production (2) Management emphasis

Effective cooperation (manufacture, distribution, design, process and purchase)
to decide reasonable delivery date, to improve the flexibility of manufacture system to improve the generalization of parts.


Classification of production system

Classified based on customization :

make to stock production for order


Make to stock
(1) production based on the forecasting (2) mass production, in big batch (3) high product inventory (4) high productivity (5) simple production organization

high risk of excess inventory or order of stock


Production for order

Characteristics: more and more popular
(1) production based on the order (2) different product has different specification, quantity, quality and delivery time (3) nearly zero inventory (4) delivery time is the key (5) multi-product and low volume production (6) complex production organization and management (7) high customer satisfaction According to the level of customization, classified into: assembly to order, make to order and engineer to order

(1) assembly to order

first produce semi-finished products (parts and components) in advance, then assemble them into different products according to customer order. e.g. automobile manufacturing

the most mature production mode, the production of parts and components are with following properties:
high standardization and generalization parts or components

big production batch

high productivity in many cases, use flow production line

(2) Make to order

all products have been designed in advance according to customer orders, buy raw materials and parts, components, manufacture and assembly them into products the customer requires.
Some raw materials and standard parts are prepared based on the forecasting forecasting should be paid great attention


(3) Engineer to order

design products according to customers requirement after receiving order, then purchase, and then make them.
Long production cycle
Pay more attention to reducing design cycle Standard and general parts should be used as much as possible, using CAD, CAPP.


Overall view of production for order

Order order

Engineer to OrderETO
Make to OrderMTO
Assembly to OrderATO


Make to StockMTS order design purchase manufacture assembly delivery


Product type and production batch

many MTO
Product type ETO few small large MTS


Production batch

Classification of production system Classified based on industry :

manufacturing industry service industry


Service industry (1)

Types of Service industry

(1) High-touch typehotelclinicrestaurant and shop (2) low-touch typeaccounting, warehouse,

equipment maintenance, transportation

Service industry managementin

many aspects, methods in manufacturing industry can be used here, e.g. fast food restaurant (group technology)/ hospital (logistic management)

Service industry (2) Characteristics

(1) Product is service, and it can not be stored.
(2) Labor denseness. (3) The standard of quality: customer satisfaction degree.

(4) Some service is included in the manufacture industry.

e.g. sales, field support (service-after-sales) and accounting.


1.3 Organization of production system

A production system is usually divided into basic units, e.g. workshop, workshop section, and working team, and all these units can be organized on the following three basic principles: 1. Process specialization 2. Object specialization 3. Group technology


Object specialization (1)

Principle: the produce unit is organized according to a product
kind ( or a part or a component kind)

Within one production unit: One products production( all

processes) is completed by different type workers using different type equipments, e. g. automobile assembling line TV assembling line .


Object specialization (2)

(1) handling distance in production process can be reduced greatly (2) the in-process inventory can be reduced greatly. (3) the cooperation among production departments can be reduced, and hence management can be simplified. (4) clear quality responsibility and cost responsibility

(1) low equipment utilization rate; (2) the whole unit can be influenced once an equipment breakdown; (3) low production flexibility

Process specialization (1)

Principle: organize the production units according to a
production process kind.

Within one production unit : the same type of workers

complete the same processes using the same type equipments. e.g. mechanical machining workshop, lathe section, drill section, heat treatment, anneal section, assembly

Process specialization (2)

Advantages (1) high equipment utilization rate, the failure of individual equipment will bring little influence on production (2) an employee do some fixed operations, which helps to improve his skills (3) Units have high flexibility, can produce various of products Disadvantages (1) long conveying routes (2) great amount in-process inventory (3) WIP needs long waiting time, which increase the production time (4) frequently cooperation and interdependency among production units, make management very difficulty


Group technology (1)

allocate different equipments into a production cell to work

on a product family that have similar shapes and process requirements.

Within one cell:

the production of a product family can be completed by different type workers using different type equipments.


Group technology (2)

1better human relations. A work team complete a whole task.

2improved operator expertise. Worker only make limited type partsrepetition means quick learning.
3Less in-process inventory and material handling. A cell include several production stages, like a production line. 4faster production setup. similar products, fewer tool changes, so fewer setup.


Process specialization vs. GT production cell



Group cell


interval flow line

warehouse customer


Production Planning and Control

The End !