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APICS Operations Management Body of Knowledge Framework, Third Edition

4.2 Manufacturing process environments

Manufacturers must design processes to conform to the nature and needs of their customer bases and the design characteristics of their products. For example, when the products created and the market served by the manufacturer are standardized commodities, the manufacturing processes and equipment are geared for high-volume, repetitive, lowest-cost production. On the other hand, when the market demands significant product differentiation, manufacturing processes are designed differently to provide flexibility.

4.2.1 Product/process matrix

Process selection refers to the strategic decision of choosing the method of production processes that will result in a product or service. General work flow patterns define the arrangements of facilities. There are five basic structures: project, job shop or work center, manufacturing cell, assembly line, and continuous process.

The relationships between layout structures often are depicted on a product-process matrix with two major dimensions. The first dimension is the volume of a product or group of standardized products produced. The second dimension is standardization, which refers to variations in the product. These variations are measured in terms of differences such as geometric, material, and others.

Facilities that match volume and product standardization characteristics generally are desirable. For example, if nonstandard products are produced at relatively low volumes, a project or work center layout is appropriate. A highly standardized product or commodity produced at high volumes would be produced using an assembly line or continuous process.

4.2.2 Make-to-stock (MTS)

In MTS environments, products are created before receipt of a customer order. Customer orders are then filled from existing stock, and then those stocks are replenished through production orders. MTS environments have the advantage of decoupling manufacturing processes from customer orders. Theoretically, this enables customer orders to be filled immediately from readily available stock. It also allows the manufacturer to organize production in ways that minimize costly changeovers and other disruptions.

However, there are risks associated with placing finished goods into inventory without having a firm customer order or an established need. These risks tend to limit MTS environments to simple, low-variety, or commodity products whose demand can be forecasted readily.

4.2.3 Assemble-to-order (ATO)

In ATO environments, products are assembled from components after the receipt of a customer order. The key components in the assembly or finishing process are planned and stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful when a large number of end products based on the selection of options and accessories can be assembled from common components.

When products are too complex or customer demand is unpredictable, manufacturers may choose to hold subassemblies or products in a semifinished state. The final assembly operation is then held until a firm customer order is received. In this environment, manufacturers theoretically cannot deliver products to customers as quickly as MTS environments, since some additional time is required to complete the final assembly.

4.2.4 Make-to-order (MTO)

In MTO environments, products are made entirely after the receipt of a customer order. The final product usually is a combination of standardized and custom items to meet the customer's specific needs. MTO environments are more prevalent when customers are prepared to wait in order to get a product with unique features—usually customized or highly engineered products. This is analogous to the difference between a fast-food restaurant and a full-service chain restaurant. MTO environments are slower to fulfill demand than MTS and ATO environments, because time is required to make the products from scratch. There also is less risk involved with building a product when a firm customer order is in hand.

4.2.5 Engineer-to-order (ETO)

In ETO environments, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. ETO environments theoretically are the slowest to fulfill: Time is required not only to build the product, but to custom design it to meet the customer's unique requirements.

4.2.6 Process design

Manufacturers have many choices regarding the design and configuration of manufacturing processes to align with the demands of the market and product designs. Some elements of manufacturing processes are dictated by the product and the technology. For example, if heat-treating is required, the piece must be brought to a particular temperature and atmospheric environment, then cooled. This places constraints on the manufacturing process.

.1 Assembly line design

In this design, work processes are arranged according to the progression of steps in making the product. Discrete parts are made by moving from workstation to workstation at a controlled rate, following the sequence needed to build the product.

.2 Cell design

Cells are similar in nature to assembly lines, except that cells typically are smaller. They are also dedicated to a specific product, a group of similar products, or a specific customer. Cells are often configured in a “U” shape to facilitate communication among the workers in the cell. “L” and “S” shapes also are common. Cells typically are scheduled to produce as needed in response to current customer demand.

.3 Work centers (job shops)

Work centers, also known as job shops, are organized around similar processes rather than around product flow. For example, in the case of a machine shop, similar machines would be grouped together—lathes in one area, grinders in another, mills in yet another. Products move between groups of machines as required by their production requirements. As general-purpose equipment is used, work centers theoretically have the lowest investment costs in equipment.

.4 Hybrid systems

Many manufacturers use a combination of the previous process designs as dictated by the manufacturing environment, product design, and customer or market demands.

4.2.7 Focused factories

Focused factories are plants established to focus the entire manufacturing system on a limited set of products, technologies, volumes, and markets precisely defined by the company's competitive strategy, technology, and economics. A focused factory can achieve the lowest possible investment cost and have the best possible Customer Relations due to the elimination of waste from market disruptions and changeovers. In a focused factory, the entire workforce, including management, is dedicated to satisfying the needs of its specific customer base or market niche.

4.2.8 Mass customization

In mass-customization environments, a process is created to support relatively high volume and variety. This has two advantages: Customers can choose specific product options and manufacturing costs can be kept low due to the volumes. An example of this system is found in personal computers, where a customer may specify processor speed, memory size, hard disk size, and many other options prior to the computer being assembled. Mass customization combines all of the cost advantages of mass production with the market advantages of high-variety, custom-made products. However, it is a difficult process to implement and requires close integration between product design, the manufacturing process, and the information system that captures the orders.

4.2.9 Capacity and flow analysis (bottlenecks)

A bottleneck occurs when one operation runs slower than others, such that its speed determines the output of the entire process. Capacity and flow analysis seeks to identify and manage the bottleneck operation. (See section 6.7.)

4.2.10 Time measurement and standards

Typically associated with industrial engineering, these are methods to scientifically study work and movement. These techniques are used to develop time standards for production activities and are used in the design of manufacturing processes to estimate manpower requirements and measure the productivity and output of the process.