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CPIM Exam – Basics of Supply Chain Management Practice Study Sheet
Chapter Fourteen – Products and Processes
• Product phases include 1) introduction phase (most expensive and risky) 2) growth phase (production increases and unit costs drop) 3) maturity phase (price competition severe) 4) decline phase (profits decline)
• 2 elements to consider with range of products 1) too narrow, lose customers 2) too broad, customers happy but costs increase due to loss of specialization
• Simplification is the process of making something easier to do or make (remove unnecessary products and variations)
• Standardization ensures that all products will be alike and interchangeable
• Modularization uses standardized parts for flexibility and variety – doesn’t necessarily reduce the range of choice for the customer (use component parts)
• Specialization – a limited range of products provides benefits
1. allow development of specially designed equipment
2. reduce the number of setups
3. labor develops speed and dexterity
• Product and market focus can be based on customer grouping (similar customers), demand characteristics (volume), or degree of customization
• Process focus is based on similarity of process
• Focused factory where factory specializes in a narrow product mix for a niche market
• Products must be designed to be 1) functional (perform as specified) 2) low-cost processing (made at least cost)
• Simultaneous Engineering coordinates between product design and process design (better chance of designing functional product at least cost). 1) reduce time to market 2) reduce cost due to less changes 3) improve quality 4) lower total system cost (involve field support in initial design)
• Process – a process is a method of doing something, generally involving a number of steps or operations. Process design is the developing and designing of the steps
• Five factors to be considered when designing a process
1. product design and quality level – machines must be able to meet quality level
2. Demand patterns and flexibility needed – if there is variation in demand process must be flexible enough to respond
3. quantity / capacity considerations – use different process for one item than for 100,000 items
4. customer involvement – more involvement with engineer to order than make to stock
5. make or buy decision – purchase more than 50% of goods manufactured
• General Purpose Machinery can be used for a variety of operations. Special purpose machinery is designed to perform specific operations on one work piece or a small number of similar work pieces (i.e. a machine for sewing shirt collars)
• Flow processes move from one work station to the next at a nearly constant rate and with no delays. There is some sort of mechanical means of moving goods between workstations (can either be repetitive manufacturing for cars or continuous manufacturing for gasoline). Flow process is also called product layout
• Flow systems are efficient because
1. workstations produce limited range of products so machinery is specialized
2. very little build up of WIP
3. lead times are short (flow system and low WIP)
4. substitute capital for labor and standardize tasks
• Intermittent manufacturing – goods are not made continuously but are made in intervals in lots or batches. Work stations must be capable of processing many different parts and processes are flexible
• Project or fixed position manufacturing is used for large complex projects like ships or buildings because moving is too expensive
• Fixed costs – do not vary with volume being produced ($200 to set up a process). Variable costs vary with the quantity produced (direct labor and direct material)
• Total cost = fixed cost + (variable cost per unit) * (units produced)
• Unit cost = total cost / number of units produced
• Cost equalization point is where the cost of one process equals the cost of another process (i.e. one with different fixed or variable costs)
• Continuous process improvement (CPI) consists of a logical set of steps and techniques used to analyze processes and to improve them. Three common elements 1) improving productivity, usually through capital investment 2) people involvement and motivation 3) teams working together for common objectives. Six steps of CPI are as follows
1. select the process to be studied
2. record the existing method to collect necessary data in a useful form
3. analyze the recorded data to generate alternative improved methods
4. evaluate the alternatives and select
5. install the method and train operator
6. maintain the new method
• Pareto diagrams – the 80 / 20 rule (a few items account for most of the costs or problems)
• Cause and effect diagram (Ishikawa diagram) – identifies root causes (materials, machines, people, methods, measurement, or environment)
• Recording defines the process. You need to know
1. the process boundaries
2. process flow
3. process inputs and outputs
4. components (resources to change inputs to outputs)
5. customer
6. suppliers (provide inputs)
7. environment (beyond control)
• Classes of activity include 1) operation 2) inspection 3) movement 4) storage 5) delay 6) decision
• Operations process charts record in sequence only the main operation and inspections
• Process flow diagram shows graphically and sequentially the various steps, events and operations that make up a process
• Developing solutions 1) eliminate all unnecessary work 2) combine operations wherever possible 3) rearrange the sequence 4) simplify
• Principles of motion economy 1) locate materials, tools and workplace within normal working areas and pre-position tools and materials 2) locate everything within maximum grasp areas 3) Arrange work so that motions are balances by being made simultaneously in opposite directions 4) minimize factors that cause fatigue
• Human and environmental factors include 1) job design – an attempt to provide more satisfying meaningful jobs and to use the workers mental and impersonal skills 2) job enlargement – include similar or related tasks in the workers job 3) job enrichment – adds more fulfilling tasks 4) job rotation (cross training)