14 Midterm Exam

MIDTERM & FINAL
EXAMINATION
INSTRUCTIONS TO EXAMINEE
1. Answer any FOUR of the THIRTEEN questions.
2. All questions carry equal marks.
3. Refer to the literature* in your answer and use concrete examples to
support your
QUESTIONS:
1. Outline the circumstances under which a manufacturing firm would choose
to redesign its production process.
2. There are certain aspects that make up a systems design. Describe these
aspects.
3. Production is considered as a process of adding value to the final product.
Describe the processes that contribute to the addition of value to the final
product.
4. A lot of time can be wasted during machine set up stage within a manmachine operational system. Highlight the ways in which this set up time
can be minimized.
5. Although electronic data processing is one of the most recommendable
production management strategies, a large number of firms in Kenya have
not embraced it. Highlight the reasons that may account for this situation.
6. Many firms are adopting the just-in-time inventory system as a way of
minimizing stock holding coasts. Explain the conditions necessary for such a
system to work.
7. Company XLT has put in place elaborate plant maintenance programmed.

Highlight the reasons why the organization way has established such
maintenance programmed.
8. The high rate failure of small scale firms in many least developed countries
may
be as a result of the management problems inherit in such firms.
Explain the
aspects of product management that may account for this
situation.
9. Describe the features of an appropriate process technology for a small-scale
industry.
10. In setting up the plant lay out, the operations manager should consider
certain physical conditions that may influence the performance of the
workers. Outline
these conditions.
11. One of the earliest analytical methods in

Highlight the merits of such analysis in
production is the motion study.

the development of work
method for an organization.

12. Highlight the product aspects that would be addressed by product design
research.
13. Please explain some terms of Operations Research (production engineers)?
a.Demand management
b.Shop floor control
c.MRP I & MRP II
d.Master Production & Scheduling
e.Production planning and aggregate planning
f.Just in- time ( Toyota Kanban System)
Kristel L. Cruz, MBA Candidate
Answer to Question No. 6:

Traditionally manufacturers have forecasted demand for their products into the
future and then have attempted to smooth out production to meet that forecasted demand.
At the same time, they have also attempted to keep everyone as busy as possible
producing output so as to maximize "efficiency" and (hopefully) reduce costs.
Unfortunately, this approach has a number of major drawbacks including large
inventories, long production times, high defect rates, production obsolescence, inability
to meet delivery schedules, and (ironically) high costs. Non of this is obvious-if it were,
companies would long ago have abandoned this approach.
Just in Time Manufacturing (JIT) - also known as "lean manufacturing" refers to a
system of manufacturing in which products are not built until the product is ordered and
paid for. Some companies that have successfully implemented JIT include Toyota, Dell
and Harley Davidson.
JIT's main philosophy is to eliminate waste - wasted inventory, wasted stock and
wasted time. By creating and delivering products quickly when consumers request them
excess inventory is eliminated, customers receive their orders quicker and the
manufacturer doesn't need to keep a large inventory of stock parts.
Below are just a few examples of successful JIT implementations.
Examples:
1. PCs Just In Time Management:
Dell Computer Corporation has finally tuned its Just-in-Time system so that an
order for a customized personal computer that comes in over the internet at 9 AM. can be
on a delivery truck to the customer by 9 P.M. In addition, Dell's low cost production
system allows it to under price its rivals by 10% to 15%. This combination has made Dell
the envy of the personal computer industry and has enabled the company to grow at five
times the industry rate. How does the company's just in time system deliver lower costs?
"While machines from Compaq and IBM can languish on dealer shelves for two months
Dell does not start ordering components and assembling computers until an order is
booked. That may sound like no biggie, but the price of PC parts can fall rapidly in just a
few months. By ordering right before assembly, Dell figures it s parts, on average, are 60
days newer than those in an IBM or Compaq machine sold at the same time. That can
translate into a 6% profit advantage in components alone."
Dell has also leveraged JIT principles to make its manufacturing process a
success. Dells approach to JIT is different in that they leverage their suppliers to achieve
the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead
times to their customers, by forcing their suppliers to carry inventory instead of carrying
it themselves and then demanding (and receiving) short lead times on components so that
products can be simply assembled by Dell quickly and then shipped to the customer.
Important Factors to Dells Success:
A dependable supplier with the ability to meet Dells demanding lead time
requirements.
A seamless system that allows Dell to transmit its component requirements so
that they will arrive at Dell in time to fulfill its lead times.
A willingness of suppliers to keep inventory on hand allowing Dell to be free of this
responsibility.
2. Toyota the Developer of JIT System
Toyota is considered by many to be the poster child for JIT success. The Toyota
production strategy is highlighted by the fact that raw materials are not brought to the
production floor until an order is received and this product is ready to be built. No parts
are allowed at a node unless they are required for the next node, or they are part of an
assembly for the next node. This philosophy has allowed Toyota to keep a minimum
amount of inventory which means lower costs. This also means that Toyota can adapt
quickly to changes in demand without having to worry about disposing of expensive
inventory.
Important Factors to Toyota Success:
Small amounts of raw material inventory must be kept at each node in production, so
that production can take place for any product. These parts are
then replenished when
they are used.

Accuracy of forecasting is important so the correct amount of raw materials
can be
stocked.
3. Harley Davidson
Harley Davidson Harley Davidsons use of JIT is mostly characterized by its
transformation in the late World War 2 era from an inefficient manufacturer that solved
all of its problems with extra inventory to a nimble manufacturer able to meet demand
and provide short lead times.
Results of Harley Davidsons JIT Implementation:
Inventory levels decreased 75 percent.

Increased productivity.
Harley Davidsons success with the implementation of JIT had a lot to do with the
fact that when JIT was put into practice, process problems could no longer be hidden by
costly inventory that helped to meet ship dates. The inefficiencies in the processes were
quickly identified and solved.
Any production process involves a series of links in a production chain. At each
stage value is added in the course of production. Adding value involves making a product
more desirable to a consumer so that they will pay more for it. Adding value therefore is
not just about manufacturing, but includes the marketing process including advertising,
promotion and distribution that make the final product more desirable.
It is very important for businesses to identify the processes that add value, so that
they can enhance these processes to the ongoing benefit of the business.
For an organization to have an effective and efficient manufacturing unit, it is

important that special attention is given to facility layout. Facility layout is an
arrangement of different aspects of manufacturing in an appropriate manner as to achieve
desired production results. Facility layout considers available space, final product, safety
of users and facility and convenience of operations.
An effective facility layout ensures that there is a smooth and steady flow of production
material, equipment and manpower at minimum cost. Facility layout looks at physical
allocation of space for economic activity in the plant. Therefore, main objective of the
facility layout planning is to design effective workflow as to make equipment and
workers more productive.
Answer to Question No. 11
Like time study, motion study is also useful tool to increase the efficiency. Here,
we are defining it. You know that workers can do any work with many ways or method.
But to choose the best way out of alternatives is called motion study. For this, cost
accountant has to maintain the data of all the activities of workers. With this study,
productivity can be enlarged and inefficiency and wastage can be diminished.
In motion study, we first of all, note the activities of laborers in work place. With
the help of stop watch equipment, spending time on per activity is noted. After this, we
have to take decision of activities which we have to stop. This study or analysis
determines prime method of doing any activity in factory. Sometime software engineer
can make the work design relating to workplace arrangement and adjustable chair for
workplace.
Benefits of Motion Study

1. It grows the ability of workers because apply of good methods, using of good tools
and stopping of unnecessary activities.
2. Life of machine can be increased.
3. It reduces exhaustion of workers.
4. It decreases labor cost due to less wastage in factory or plant.
Zarvie-An P. Arcega, MBA Candidate

Because supply chain redesigns are expensive and time-consuming, they
often get deferred. But if your company shows any of these warning signs, then you
probably can't afford to put it off any longer.
A supply chain redesign is the type of project that often gets deferred, especially
when budgets are tight. It is complex and time-consuming, and many organizations lack
the needed skills and experience. Moreover, a thorough analysis may be expensive, which
can be hard to justify in the current economic climateeven though in our experience,
such analyses typically identify savings ranging from 12 percent to 20 percent of total
warehousing and transport costs. In addition, it is difficult to determine before embarking
on the project what benefits a supply chain redesign project will uncover.
These potential drawbacks deter many companies from initiating a supply chain
redesign project. But there are times when a redesign deserves a higher priority. Here are
seven signs that it's probably time to rethink your supply chain network, along with some
ideas about alternative network configurations.
1. You have objectives rather than strategies. The first sign that it may be time
for a redesign is that you are focused on supply chain objectives but lack a clear strategy.
2. People ask: Why do we do things this way? The second sign that it may be
time for a redesign is that few people in your organization recall exactly why your
company's warehouses are located where they are. It may mean that the current supply
chain configuration is no longer fit for today's requirements.
3. The number of products and customers is growing faster than your
budget. The third sign is that your budget is not growing as fast as your product range
and customer base.
4. Consolidation or collaboration is coming. An impending acquisition,

collaboration with another company to share resources, or centralization of previously
decentralized supply chain functions all suggest that a network redesign is probably in
order.
5. You experience a major service failure. An important customer has just called
and expressed dissatisfaction concerning a service failure. If this is not the first time that
problem has occurred, then you may have a systemic problem, and a redesign could help
prevent it from happening again.
6. Fear is in the air. Your company's own practices and processes are in good
shape, yet the CEO is nervous. What's worrying him or her? The things the company
can't control, like supply chain disruptions that will affect profits and investors' earnings.
When that's the case, it's time for an assessment (or a reassessment) of potential risks to
your supply chain and perhaps a network revision that will reduce the potential for
disruption.
Conducting such an evaluation will require you to identify risk factors and assess
each one's probability of occurrence and its likely impact. Having that information will
focus management's attention on developing appropriate mitigation plans for the key
risks.
7. It's time to renew a third-party logistics contract. It is difficult to revise your
supply chain when your company is tied into long-term contracts with third-party
logistics (3PL) partners. Best practice, however, is to review your network design every
three to five years, which tends to be in line with the length of third-party logistics
contracts. Thus, about a year before a contract is scheduled for renewal is a good time to
begin reconsidering your supply chain configuration. This gives you time to obtain
support for change within the organization and to negotiate contracts for new lanes or
locations.

When looking at the value of the product or service, the goal is to have the value
of the end-product or services exceed the cost of producing the product or providing the
service. The cost of the product or service includes all resources used to produce it (e.g.,
raw materials, labour, storage, transportation, and overhead costs).
We need to examine each activity within the process and determine the valueadded assessment of the activity. The value added by an activity, in an accounting sense,
is simply:
(Value of the product after the activity) - (Value of the product prior to the
activity).
The value added by an activity should be a positive value. Ideally, the value added
by the activity is equal to or greater than the costs incurred during the activity.
Value from the customer's point of view is independent of the cost to produce the
product or provide the service. It is based on the customer's expectations, as identified by
the effectiveness indicators for the process.
How to Assess Value
When looking at activities in a process, we must determine if the activity is

effective and efficient. We must also determine if the activity can be improved to provide
a better product or service for the customer. Refer to the effectiveness indicators selected
for the process to determine how the activity rates on the effectiveness indicator
scale. Look at the efficiency indicators of the activity. Wide variances in the efficiency
(cost or times) of the activity can indicate problems in the activity. Analyze the cost and
times collected for the activity to determine the value added by the activity versus the
cost of the activity.
Tips and Hints
The aim for productivity improvement is to reduce the BVA activities and to
eliminate the NVA activities. Often attempts are made to improve the efficiency of the
waste activity rather than to eliminate the waste. For example, rather than improving the
inspection activity so that it can be completed more efficiency; the process should be redesigned to eliminate the need to inspect the product.
By removing waste activities, the cost of the product to the organization is

reduced, because the unnecessary resources are not used. The cycle time of the process is
also reduced when waste activities are removed. Reducing the cycle time of the process
improves customer service, because the product is available to the customer sooner.
When looking for ways to reduce BVA activities and to eliminate NVA activities,
be creative and innovative. The current environment should not be considered a
constraint.

The requirements for chemical and food production technologies will change in
the future as a result of shorter time to market and increasing market volatility. Especially
the rising use of renewable resources will require the implementation of flexible and fast
to install small-scale production technologies. The increasing number of necessary
apparatuses and their distributed operation, however, will constitute major challenges,
both
economically
and
procedurally.
The proposed solution to face the economic challenge is modularization and

standardization. For food production, dewatering represents a key issue. Thus, biomass
processing should first be divided into small-scale water separation steps and then into
further large-scale processing steps. As dewatering usually happens thermally and heat
exchangers often benefit from the economies of scale, heat supply and energy
consumption or heat transfer with little capital investment are further issues. Therefore,
temperature levels should be decreased and the use of solar heat increased. For the
production of biofuels and chemicals from biomass, process integration and process
simplification are proposed to improve the efficacy of production equipment and
processes. Choosing raw materials with molecular structures, similar to the desired
chemical building block, will lower the need for heat exchange and make small-scale
manufacturing of fuels and chemicals
possible.

a. Demand Management
Demand Management is a planning methodology used to forecast [predict], plan
for and manage the demand for products and services. This can be at macro levels as in
economics and at micro levels in public service organizations both governmental and
NGO, industries including energy. Demand Management has a very defined set of
processes, capabilities and recommended behaviors for companies that produce all
manner of goods and services. Consumer electronics and goods companies often lead in
the application of demand management practices to their demand chains; demand
management outcomes are a reflection of policies and programs to influence demand as
well as competition and options available to users and consumers. Effective demand
management follows the concept of a "closed loop" where feedback from the results of
the demand plans is fed back into the planning process to improve the predictability of
outcomes. Many practices reflect elements of the theory of Systems Dynamics.
Increasingly volatility is being recognized as significant an issue as the focus on variance
of demand to plans and forecasts.
b. Shop Floor Control

Shop Floor Control are methods and systems used to prioritize, track, and report
against production orders and schedules. They include the procedures used to evaluate
current resource status, and the update of labor, machine hour, and other associated
information as required to support the overall planning, scheduling, and costing systems.
c. MRP I & MRP II

MRP stands for material requirements planning and deals with bringing in the
right amount of raw material at the right time to support production. MRPII stands for
manufacturing resource planning and builds on MRP by adding shop floor production
planning and tracking tools. A third-generation system available at time of publication is
called ERP, or enterprise resource planning, which integrates all departments of the
business, not just manufacturing and purchasing.
Material Requirements Planning, or MRP, was developed in the 1970s to help
manufacturing companies better manage their procurement of material to support
manufacturing operations.
MRP
systems translate the master production schedule into component- and raw
material-level demand by splitting the top level assembly into the individual parts and
quantities called for on the bill of materials, which reports to that assembly, and directs
the purchasing group when to buy them based on the component lead time which is
loaded in the MRP system.
MRPII
Manufacturing Resource Planning, or MRPII, goes several steps beyond MRP.
While MRP stopped at the receiving dock, MRPII incorporates the value stream all the
way through the manufacturing facility to the shipping dock where the product is
packaged and sent to the end customer. That value stream includes production planning,
machine capacity scheduling, demand forecasting and analysis modules, and quality
tracking tools. MRPII also has tools for tracking employee attendance, labor contribution
and productivity.
d. Master Production & Scheduling
A master production schedule (MPS) is a plan for individual commodities to
produce in each time period such as production, staffing, inventory, etc. [1] It is usually
linked to manufacturing where the plan indicates when and how much of each product
will be demanded.[2] This plan quantifies significant processes, parts, and other resources
in order to optimize production, to identify bottlenecks, and to anticipate needs and
completed goods. Since an MPS drives much factory activity, its accuracy and viability
dramatically affect profitability. Typical MPS's are created by software with user
tweaking.
Due to software limitations, but especially the intense work required by the
"master production schedulers", schedules do not include every aspect of production, but
only key elements that have proven their control effectively, such as forecast demand,
production costs, inventory costs, lead time, working hours, capacity, inventory levels,
available storage, and parts supply. The choice of what to model varies among companies
and factories. The MPS is a statement of what the company expects to produce and
purchase (i.e. quantity to be produced, staffing levels, dates, available to promise,
projected balance).
The MPS translates the customer demand (sales orders, PIRs), into a build plan
using planned orders in a true component scheduling environment. Using MPS helps
avoid shortages, costly expediting, last minute scheduling, and inefficient allocation of
resources. Working with MPS allows businesses to consolidate planned parts, produce
master schedules and forecasts for any level of the Bill of Material (BOM) for any type of
part.
e. Production planning and aggregate planning

Production planning is the means by which we prepare our production quantities
for the medium term (generally one year). Aggregate planning refers to the fact that the
production planning is usually carried out across product lines. The main difficulty is that
demands vary from month to month. We want to keep production as stable as possible yet
maintain no inventory and experience no shortages. We must balance the costs of
production, overtime, subcontracting, inventory, shortages and changes in production
levels. In some case aggregate planning problems might require the use of the
transportation or linear programming modules.
Production planning problems are characterized by a demand schedule, a

corresponding production schedule and various costs. In addition, we have the following
considerations.
Shortage handling. In production planning there are two models for handling
shortages. In one model shortages are backordered. That is, demands can accumulate and
be met in later periods. In another model the shortages become lost sales. That is, if you
can not satisfy the demand in the period in which it is requested the demand disappears.
This option is above the data table.
Initial Inventory. Often times we have a starting inventory from the end of the
previous month
Production costs - regular time, overtime and subcontracting. These are the per
unit production costs depending on when and how the unit is made.
Inventory (Holding) cost. This is the amount charged for holding one unit for one
period. The total holding cost is charged against the ending inventory. Be careful because
while most textbooks charge against the ending inventory some textbooks charge against
average inventory during the period.
Shortage cost. This is the amount charged for each unit that is short in a given
period. It is assumed that the shortages are backlogged and satisfied as soon as stock
becomes available in a future month or are lost sales as indicated by the option box above
the data table. Shortage costs are charged against end-of-month levels.
Cost to increase production. This is the cost due to having changes in the
production schedule. It is given on a per unit basis. The cost for increasing production
entails hiring costs. It is charged only against regular time production changes. If the
initial production level is 0 then there will be no charge for increasing production in the
first period.
Cost to decrease production. This is similar to the cost of increasing production
and is also given on a per unit basis. However, this is the cost for reducing production. It
is charged only against regular time production changes.
f. Just in- time ( ToyotaKanban System)
Just-in-time
The Toyota Production System fulfils customer demand efficiently and promptly
by linking all production activity to real marketplace demand. Just-in-time
production relies on finely tuned processes in the assembly sequence using only the
quantities of items required, only when they are needed. Imagine a process designed to
produce six different types of product, where the total weekly demand for the range of
products varies up and down by 25%, and the daily mix of product types is continuously
changing.
A planning challenge, but also a typical scenario in many types of business in which the
process (manufacturing or otherwise) has to continuously respond to demand. Toyota
Production System has responded to this reality of life by developing an approach that
can meet the challenge in an efficient, cost-effective way.
How
Just-in-time
benefits
your
organization.
Just-in-time offers a smooth, continuous and optimized workflow, with carefully

planned and measured work-cycle times and on-demand movement of goods,
reduces the cost of wasted time, materials and capacity. Team members can
concentrate on their tasks without interruption, which leads to better quality, timely
delivery, and peace-of-mind for Toyotas customers.
In order to have this flexibility it is necessary to have the right things in the right
place at the right time.
The kanban card is a simple, highly visible device that the Toyota Production
System uses to call-up components as they are required, meaning only a minimal stock of
components is held in the assembly area. Before stocks need replenishing a kanban card
instruction from the operator ensures a just-in-time delivery.
Joshua V. De Vera, MBA Candidate

The system design is very important in the business industry ,especially, in
production and operation management and these aspects that make up a systems design is
necessary to the process of defining the architecture, components of system design
and data for a system to satisfy specified requirements and also systems design could be
seen as the application of system theory to product development
and the strategic
decisions of selecting the kind of production process to have in a manufacturing plant and
then system design is the act of taking the marketing information and creating the design
of the product to be manufactured. Systems design is therefore the process of defining
and developing systems to satisfy specified requirements of the user.
Aspects of System Design
The architectural design of a system emphasizes on the design of the system
architecture which describes the structure, behavior, and more views of that system and
analysis.
The logical design of a system pertains to an abstract representation of the data

flows, inputs and outputs of the system. This is often conducted via modeling, using an
over-abstract model of the actual system. In the context of systems design are included.
The physical design relates to the actual input and output processes of the system.
This is explained in terms of how data is input into a system, how it is verified or
authenticated, how it is processed, and how it is displayed as In Physical design.
The system design affects quality, cost, and satisfaction it depends on the cases. If
is not well designed or if the manufacturing process is not true to the system design, the
quality of the system may suffer. For me when we think of design we usually think of car
design or computer design and envision engineers working on diagrams. The examples of
aspects that make up a system design are the object oriented and analysis design methods
are becoming the most widely used methods for system design. The UML has become the
standard language in object-oriented analysis and design. It is widely used for modeling
software systems and is increasingly used for high designing non-software systems and
organizations.
Physical Design
This is explained in terms of how data is input into a system, how it is
verified/authenticated, how it is processed, and how it is displayed as In Physical design,
the following requirements about the system are decided.
1. Input requirement,
2. Output requirements,
3. Storage requirements,
4. Processing Requirements,
5. System control and backup or recovery.
Put another way, the physical portion of systems design can generally be broken
down into three sub-tasks:
1. User Interface Design
2. Data Design
3. Process Design
User Interface Design is concerned with how users add information to the system
and with how the system presents information back to them. Data Design is concerned
with how the data is represented and stored within the system. Finally, Process Design is
concerned with how data moves through the system, and with how and where it is
validated, secured and/or transformed as it flows into, through and out of the system.

As MBA Student we need to know and understand the process of eliminating
nonconformities or to reduce a lot of time can be wasted during machine set up stage
within a man-machine operational system, one must first understand the sources of
nonconformities and the most effective ways to eliminate or control this issue, Actually,
the goal of every operation or production system is to generate a useful product and also
to reduce set up. The product may be a service, information, or physical object. Each
production cycle begins with inputs that are transformed by a process into a more desired
state or into the product. In each process, excessive variations and errors can cause
nonconformities,
with
three
undesirable
consequences:
scrapped
or
wasted
resources; degraded process throughput; contamination from undetected nonconformities,

reducing the value of the product to the customer.
The goal of quality control in every production system is to eliminate
nonconformities and their consequences, eliminate rework and wasted resources,
and achieve these goals at the lowest possible cost. Most quality-control methods were
initially developed to aid manufacturing. This is not surprising because high- volume
production typically requires many repetitions involving a controlled sequence of
operations. Where operations are frequently repeated, it is easier to recognize processing

errors and identify appropriate control measures. In this situation its very important to
know the nonconformities in production and operation, so that we will reduce the wasted
time during machine set up and also to be aware to the cost of production being used by
the organization and management.

I think one of the reasons of the organization is to have an effective maintenance
programmed will make plant and equipment more reliable. Fewer breakdowns will mean
less dangerous contact with machinery is required, as well as having the cost benefits of
better productivity and efficiency. Additional hazards can occur when machinery
becomes unreliable and develops faults. Maintenance allows these faults to be diagnosed
early to manage any risks. However, maintenance needs to be correctly planned and
carried out. Unsafe maintenance has caused many fatalities and serious injuries either
during the maintenance or to those using the badly maintained or wrongly maintained and
repaired equipment. Establishing a planned maintenance programmed may be a useful
step towards reducing risk, as well as having a reporting procedure for workers who may
notice problems while working on machinery.

For me the features of process technology is a component part to support for
small-scale industry, most of the process technology has a broader focus, dealing with
management, organization, sales, employment, income and general quality issues. It
contains technical details about upgrading of products, processes and organization, the
support needed to bring about such improvements and the effectiveness of delivery
mechanisms. Yet technological competence is an especially important determinant of
small manufacturers ability to hold their own in a context of liberalization and increasing
integration of manufacturing into global networks.
Potential benefits of institutional support to small firms are large. By improving

access to information, finance and suitable technologies, support can help fill the missing
middle observed in the manufacturing size structure in poor countries. Dynamic small
firms could also contribute significantly to national exports. Moreover, clusters of
geographically close producers may create significant positive dynamic externalities.
Arnold L. Dacuma, MBA Candidate

Process redesign methodologies have several conditions that enterprises must
reach to obtain a more efficient implementation process. Up to now, there is not a clear
definition of these requirements. These conditions include five organization aspects:
strategy, process, people, control and information systems.
The methodologies of process redesign present the improvement process as a
strategic option that contributes to increase productivity and business competitiveness. It
also considers that the strategy should be complemented with elements like appropriate
information systems, mechanisms for control and monitoring processes. The redesign
presents an evolutionary approach, which permits the organization to move forward in a
managed way, it also permits to achieve an average impact, and visible and forceful
profits. Understanding that redesign is a way to achieve a high performance process.
The concept of process redesign was initially developed with the approaches of
Taylor in 1911 and the Gilbreth spouses in 1917, which decomposed each task into an
ordered series of movements, in order to identify those that should be removed,
simplified or merged with others. Davenport and Short focused the concept on the
description of the processes, defining critical processes and analyzing them, to reduce
cycle times, to strengthen the value chain and to improve competitiveness. Tenner and De
Toro argue that process redesign is focused not only on small improvements to solve
problems, but also on the improvement of all organization processes
There are at least three distinct situations in which redesign is important:
1. In the original design of an engineering system where we have come up with a first
version of the design which needs to be improved.
2. An existing design has to be changed to accommodate a new manufacturing or
assembly environment.
3. An existing design has to be redesigned for improved performance, lower cost, higher
reliability etc.
Systems design is the process of defining the architecture, components, modules,
interfaces, and data for a system to satisfy specified requirements. Systems design could
be seen as the application of systems theory to product development. There is some
overlap with the disciplines of systems analysis, systems architecture and systems
engineering. If the broader topic of product development "blends the perspective of
marketing, design, and manufacturing into a single approach to product development,
then design is the act of taking the marketing information and creating the design of the
product to be manufactured. Systems design is therefore the process of defining and
developing systems to satisfy specified requirements of the user.
Architectural design
The architectural design of a system emphasizes on the design of the systems
analysis.
Logical design
over-abstract (and sometimes graphical) model of the actual system. In the context of
systems design are included. Logical design includes ER Diagrams i.e. Entity
Relationship Diagrams.
Physical design
1.
Input requirement,
2.
Output requirements,
3.
Storage requirements,
4.
Processing Requirements,
5.
System control and backup or recovery.


1.
User Interface Design
2.
Data Design
3.
Process Design
with how the data is represented and stored within the system.
Finally,
Process
Design is concerned with how data moves through the system, and with how and where it
is validated, secured and/or transformed as it flows into, through and out of the system.
At the end of the systems design phase, documentation describing the three sub-tasks is
produced and made available for use in the next phase

a) Have everything ready for the changeover next to the machine ahead of
This means everything material, tooling, tools, fixtures, paperwork,
etc. Our goal is not to leave the machine to search for anything
time.
check
while
gages,
doing
changeover. No more walking around and searching.

b) Fix broken equipment. Find what is broken and repair it.
c) Double up the changeover team. Most setups are done by a single person,
which
can add to the wasted time in a setup, especially when we need to work
on both sides
of the machine. More likely, we can cut our setup time in half
do
and
tasks
in
parallel if we used two-person team for changeovers.

d) Dont skimp on the tooling. Invest in additional sets of tool holders so the
tooling
can be pre-set ahead of time.

Setup reduction should be approached in four phases or stages as illustrated
below. It is usually best to repeat the process through several iterations spaced several
months apart. The initial phases of setup reduction (SMED) are straightforward and easy,
yet often bring the greatest benefits. People are constantly amazed at how much time is
wasted through disorganization and general messiness. Improving elements and

eliminating adjustments will require more imagination, time and cost.
The "Kaizen Event" or "Blitz" is an excellent vehicle for setup reduction. It
generates enthusiasm and fast results which make the efforts less mundane.
1. Maintenance, Organization and Housekeeping
It often happens that setup problems are related to poor maintenance such as worn
parts, worn tooling, dirt, or damaged threads. Disorganization and poor housekeeping are
also contributors to setup problems. These are easy to fix and should be a first step.
2. Internal Elements to External
Internal elements occur when the machine is down. Examine each internal
element and see if it cannot be done externally. For example, the pre-heating of an
injection molding die could be done before it goes into the machine.
3. Improve Elements
Here we examine every element to see how we can eliminate it, simplify it,
reduce the time required or improve it in some other way.
4. Eliminate Adjustments
Adjustments are often the most time consuming, frustrating and error prone parts
of a setup. There are many ways to eliminate them entirely and this is the ultimate goal.

Associated with Japanese management techniques, just-in-time production (JIT)
is a set of principles and practices based on the philosophy that firms should hold little or
no inventory beyond that required for immediate production or distribution. That is, a
manufacturer should receive raw materials or parts from its suppliers perhaps just hours
before they will be used in production, and the firm's output should be shipped to its
customers as soon after completion as possiblewithout holding onto a stock of either
raw goods or finished products.
In practice, JIT has often been expressed as a holistic management system aimed
at reducing waste, maximizing cost efficiency, and securing a competitive advantage.
Thus, a number of additional conditions are considered necessary for the successful
implementation of JIT. These include small lot sizes, short setup and changeover times,
efficient and effective quality controls, and perhaps most of all, designing the whole
production process to minimize backups and maximize the efficiency of human and
machine labor.
Considerations
Japans auto industry meant JIT to operate within a culture of continuous
improvement, as one way to eliminate waste. JIT may be a good way to introduce
continuous improvement or quality management, but it is very difficult to implement as a
stand-alone process. Managers in charge of ordering or purchasing may need to
familiarize themselves with alternative shipping methods such as less-than-truckload
(LTL) carriers who consolidate loads and routes to fill a trailer. This may even require
coordinating with other companies operating within the area, as in an industrial park.
Personnel managers need to communicate with staff, stressing the importance of JIT to
providing quality products and services and reducing costs, as well as convincing staff of
the benefits in rounding out skill sets by taking on different tasks.
Resolution
Conventional wisdom holds that inventory provides a buffer to ensure smooth
operation against supply chain disruptions, from delivery delays through individual
workstation breakdowns to unanticipated consumer demand. However, a carefully
planned and systematically executed JIT system can eliminate waste and encourage
higher-quality output. Workers take ownership as they comprehend that nothing goes to
waste and that they control the processthere is no cushion or margin of error to fall
back on. All workers, tools and processes work with one purpose: gaining and keeping
customers. Anything or anyone not contributing to that purpose can be whittled away.
Janice T. Buenavista, MBA Candidate

Redesigning a business process requires complete overhaul of the key production
process in order to achieve performance measures, such as Return on Investment (ROI),
cost reduction, increasing throughput, and of providing quality service. This entails the
analysis and redesign of workflows to optimize end-to end process and automate nonvalue added tasks. Customers pay for non-value added tasks which should be eliminated
because it only add up to our products without the benefit accruing to them.
For
example, is the moving of large batch of inventories from one workstation to the other,
this non-value added cost should be eliminated by redesigning the factory layout.
A manufacturing firm will redesign its production process for the following
reasons:
1. Technological changes- with the advancement of technology, many companies
shifted from manual production to automated one.
2. Competitive market- when a rival enters the industry with a more advanced
technology and production process
3. Environmental and legal aspects

4. Economic and demographic changes
5. Safety

Companies use a Just-in-Time manufacturing and inventory management
system to improve the efficiency of the company and reduce costs. This system requires
manufacturers to purchase only when customer orders create a demand. It means that
companies purchase materials and produce units only as needed to meet actual cost of
demand. Raw materials are received just in time to go into production, manufactured
parts are completed just in time to be shipped to customers. As a result, inventory is
reduced to minimum and in some cases are zero. It is because inventory is tied up in
money. Furthermore, large amount of inventory encourages inefficient and sloppy work
results in too many defects.
Conditions for such system to work is through the use of pull approach. This
approach works like this: At the final assembly stage, a signal is sent to the preceding
workstation as to the exact amount of materials that will be needed for the next few
hours to assemble products to fill customer orders, and only that amount of materials is
provided. The same signal is sent back through each preceding workstation so that a
smooth flow of parts is maintained. Thus all workstations respond to the pull exerted by
the final assembly stage, which in turn respond to customer orders.
Another condition is that, the company should entail JIT Purchasing. Under this,
the company relies on a few ultra-reliable suppliers and dependable suppliers with longterm contracts. Dependability is needed because if a part is unavailable, the entire
operation may shut down.
Second, deliveries are frequent and in small lots just as the
materials are needed. Third, suppliers must deliver defect-free goods. Defects cannot be
tolerated.
In addition, is the improvement to plant layout. This is done by arranging the

flow line, such that all machines needed to make a particular product are brought together
in one location to reduce moving time and handling time. By this way, we improve our
throughput.
Another is to reduce setup time. Set up time includes moving materials, changing
machine settings, setting up equipment and running time in case production is switched
when making one type to another. This is done by producing in large batches and by
having a dedicated flow line so that if equipment is dedicated to a single product, setups
are largely eliminated and products are produced in any batch size desired.
Still another condition is that, there must be zero defects because when completed
units contain defective product, this would result to delivering of units with less than the
required or may result in the delay of shipping.
Lastly, there must be flexible workforce. They should be multi-tasking.
a. Demand Management
The function of recognizing all demands for goods and services to support the market
place. It involves prioritizing demand when supply is lacking. Proper demand
management facilitates the planning and use of resources for profitable business results.
The last few decades have seen an increasing demand for enterprise software
applications that can streamline supply chain processes and provide lean manufacturing
capabilities. At the other end of the supply chain, companies have been moving towards
outsourcing their product distribution in order to keep sales overhead in check without
sacrificing revenue.
These recent trends have resulted in a unique dilemma. While companies can
produce products more efficiently, they have little knowledge regarding what to produce,
for whom and when. They now have better visibility into their supply chains but they
lack the same kind of visibility into their often-fragmented demand chain.
The current economic slowdown and huge inventory write-offs resulting from this
lack of visibility have highlighted the need for a systematic way to predict and manage
demand. New technologies provide the capability to extend supply chain visibility that
can support a truly dynamic collaborative internal environment; but companies are
looking beyond sources within the enterprise, such as sales and promotions groups, to
include customers in the demand management cycle.
Accurate forecasting remains central to the success of a demand management
initiative, but demand management is much more than just forecasting. Traditionally,
forecasting involves looking at past demand data to predict future demand. Demand
management goes beyond the static forecasting of yesterday, replacing it with a more
fluid, ongoing view of determining demand that involves all demand-chain constituents.
Currently there is a thrust towards real-time synchronization of the supply chain to the
demand signals. This collaborative method enhances the accuracy of forecasting since all
factors affecting that forecast can be viewed by all stakeholders, including customers.
b. Shop Floor Control
Are methods and systems used to prioritize, track, and report against
production orders and schedules. It includes the procedures used to evaluate current
resource status, labor, machine usage, and other information required to support the
overall planning, scheduling, and costing systems related to shop floor operation. Shop
floor control typically calculates work in process based on a percentage of completion for
each order and operation that is useful in inventory valuations and materials planning.
Shop floor control is responsible for the detailed management of activities and the
flow of materials inside the plant, including employees, materials, machines, and
production time. Shop floor control activity typically begins after planning (e.g., with
MRP, ERP); once planned, orders and purchase requisitions are created. Shop floor
control attends to the following functions (sequentially):
Planned orders
Conversion of planned orders to process/production
Production and process order scheduling
Capacity requirements planning
Material availability assessment
Release of production/process orders
Material withdrawals
Order confirmations
Goods receipt documentation
Order settlement
Shop floor control may also include identifying and assessing vulnerabilities and
risks due to the shop floor environment, employees, process, and the technologies
employed at the shop-floor level. Based on the assessment of these factors, shop floor
control initiates measures to keep risk at an acceptable minimum level.
Best practices for shop floor control include:
Efficiently execute, prioritize, and release work orders to the shop floor with
real-
time status of progress and completion.
Deliver accurate and up-to-date information on materials consumption and

availability, which is essential for reliable inventory planning and costing.
Effectively execute change management processes to ensure that the proper

revision of products, bills of materials, and processes are always in place for
production.
Automate shop floor equipment control and data collection to reduce human
errors
and increase productivity.
Provide the correct manufacturing SOPs, technical drawings, and diagnostics
to shop
floor operators to reinforce training and ensure proper processing.
Download setup programs directly to equipment based on product and process

specifications.
With fully interactive access to shop floor control software, supervisors can
monitor shop activities and make better decisions on the spot, especially using mobile
computing equipment.
In summary, shop floor control within a manufacturing execution system (MES)
can improve the productivity of any shop, regardless of its manufacturing style or
capacity. Assembling, cutting metal, or fabricating all require common functions; shop
floor control programs can adapt to the operation. When evaluating the need for shop
floor control, remember that the driving force is data. Properly executed, shop floor
control should deliver the right information at the right time to the right placewithout
fail. Consequently, shop floor efficiency and productivity rise appreciably.
c. MRP 1 and MRP 2.
MRP stands for material requirements planning and deals with bringing in the
planning and tracking tools. A third-generation system available at time of publication is
called ERP, or enterprise resource planning, which integrates all departments of the
business, not just manufacturing and purchasing
MRP is a computer program that translates finished product requirements into

time-phased requirements for each dependent demand items. The Bill of Materials, one of
the three primary inputs of MRP, is useful because it is a list of all the assemblies, subassemblies, parts, and raw materials that are needed to produce one unit of a finished
product.
manufacturing operations. MRP systems translate the master production schedule into
component- and raw material-level demand by splitting the top level assembly into the
individual parts and quantities called for on the bill of materials, which reports to that
assembly, and directs the purchasing group when to buy them based on the component
lead time which is loaded in the MRP system
In addition to MRP, ERP or
"Enterprise Resource Planning" provides an
expanded effort to integrate standardized record keeping that will permit information
sharing among numerous dimensions of a business in order to direct the system more
effectively. An ERP system typically has modular hardware and software units and
"services" that communicate on a local area network.
MRP enables managers to: determine the quantities for a given order size, know
when to release orders for each component, and to be alerted when items need attention.
Other benefits of MRP include:
1)
Low levels of in process inventories
2) The Ability to keep track of material requirements

3) The ability to evaluate capacity requirements generated by a given master
schedule
4) A means of allocating production time

5) The ability to easily determine inventory usage by backflushing.
Backflushing is a procedure in which an end item's bill of materials (BOM) is
periodically exploded to determine the quantities of the various components that were
used to make the item. The people who are typical users of a MRP system in a typical
manufacturing company are production managers, purchasing managers, inventory

managers, and customer representatives. The benefits of MRP depend primarily on the
use of computer to maintain up-to-date information on material requirement.
and productivity.
A discussion of MRP and MRPII would be incomplete without mentioning
Enterprise Resource Planning. ERP is the next evolution of the MRP system. While MRP
helped companies plan material purchases, and MRPII added in-plant scheduling and
production controls, ERP attempts to integrate the information flow from all departments
within a company: finance, marketing, production, shipping, even human resources.
While some argue that ERP does not deliver on its promise, according to an article on
CIO.com, a properly set up ERP system allows better communication and monitoring
than ever before, giving all departments access to the exact
d. Master Production Scheduling
Master Production Scheduling or MPS is a manufacturing planning tool that is
used to capture a number of variables from different elements of the organization
(customer demand, capacity, inventory levels, material flows, etc) and then describe
which parts the organization will manufacture and at what frequency.
MPS is a fairly standard tool within manufacturing companies its usually
administered through the operations/planning function and controlled by a team headed
by a Master Production Scheduler. Its typically administered through the MRP system.
The MPS process stops the business being led by the he who shouts loudest gets their
parts syndrome and delivers a manufacturing plan that not only targets meeting the
needs of the customer but also the broader capabilities of the manufacturing organization.
Five key benefits of Master Production Scheduling are: First, It can help to
smooth the demand signal. Most customer demand signals will contain peaks and troughs
of demand this profile can result in planning problems and inefficiency for
manufacturers. A significant benefit of MPS is that since it decouples the customer
demand from what is manufactured batch sizes can be tuned to optimize the production
process. Where demand is particularly spiky (ie. Peeks and troughs of demand) this can
be of enormous assistance producing a steady drum beat of manufacture (taking
advantage of batch sizes and minimal setup times) which can then ripple through the
supply chain. Second, It protects lead time and helps book future deliveries. A common
complaint for many organizations is that demand is loaded within lead time i.e. if a part
takes 100 days to manufacture its no good taking a customer demand for delivery in 50
days where there is no stock you are struggling before youve even started the
manufacturing process. This can create panic amongst the staff throwing existing
priorities into disarray. Whilst there are a variety of methods that can be used to stop this
MPS can be a very effective method as it is the production schedule that drives the
manufacturing not the customer demand. This enables the organization to protect its lead
time but also assists planning in looking at when future customer requirement is best
supported by manufacturing output. Third, it acts as a single communication tool to the
business. A major benefit to any organization that adopts MPS is that it acts as a single
communication tool for the business regarding its manufacturing plans. The MPS
schedule is typically available via the MRP system however whatever the method its
imperative that its communicated in an easily understandable form that can be used
throughout the organization. Fourth, It helps the Supply chain prioritize requirement.
Having a fixed schedule enables the supply chain team in particular the procurement
function to communicate priorities and requirements effectively. One of the key problems
many manufacturing organizations face where they are led by changing customer
requirement is where the supply chain gets reprioritized depending on the problem of
the week. Its no surprise that suppliers work best to regular smoothed demand where
that demand in unstable it can often lead to missed deliveries (of what was planned) let
alone the detrimental affect to relationships with suppliers that struggle to keep up with
whats really required. Fifth, it helps stabilize production. Master production schedules
are best reviewed as part of a formal business process which includes the relevant
stakeholders and often requires senior sign off before it is either loaded into the MRP
system or is passed to production for action. Typically master production schedules do
not allow planning in arrears so where failures have happened and product has not been
manufactured as planned these items are re-planned to a relevant point in the future.
Another common attribute of a master production schedule is that there is usually a
fixed planning window whereby plans do not get changed. For example the first 6 weeks
of the plan maybe termed fixed. This enables production to concentrate on whats ahead
of them without worrying about reprioritizations. Additions may be added to this fixed
period but usually such amendments are tightly controlled.
While, as with any business process, there are challenges associated with
deploying a master production schedule there are some enormous and tangible benefits.
Manufacturing plants can get themselves into chaos by not administering the
manufacturing demand signal appropriately and this can have huge affects on the supply
chain driving reprioritizations, excess inventory and causing untold grief to the
relationships to key suppliers. Used correctly MPS can right many of these problems
generating a stable and considered plan to drive the business.
e. Aggregate Planning And Production Planning
Aggregate/production planning or intermediate planning balances supply and demand by
minimizing the production cost, adjustment cost, and opportunity cost of a system.
Planners are concerned with the quantity and the timing of both the supply and demand.
Special challenge comes from uneven demand within the planning horizon.
For example, in a department store, space allocation is often an aggregate decision.
That is, the manager might decide to allocate 20 percent of the available space in the
clothing department to women's sportswear, 30 percent to juniors, and so on, without
regard for what brand names will be offered or how much of juniors will be slacks. The
aggregate measure might be square feet of space or racks of clothing. The allocation
might change over time. Aggregate planning typically covers a time horizon of 2 to 18
months, i.e., a rolling planning horizon covering the next 2-18 months. It is essentially a
"big picture" approach to planning. Planners focus on a group of similar products or
services, or sometimes an entire product or service line. The aggregate planning is
particularly useful for organizations that experience seasonal or other fluctuations in
demand or capacity.
Two major reasons of doing intermediate-range planning are time and level of
accuracy. It takes time to develop and implement a plan. It is also not possible to predict
the timing and volume of demand for individual items with any degree of accuracy.
The goal is to achieve a production plan that will effectively utilize an
organization's resources to meet expected (forecasted) demand. Planners must make
decisions on output rates, employment levels and changes, inventory levels and changes,
back orders, and subcontracting.
Inputs to aggregate planning include demand forecast, available resources, policies
regarding employment levels, and so on. The output of the aggregate planning is a
production plan or an operations plan with overall decisions on level of output, capacity,
employment, and inventory.
Kanban is one of the Lean tools designed to reduce the idle time in a production process.
The main idea behind the Kanban system is to deliver what the process needs exactly
when
it
needs
it.
In Japanese, the word Kan means "visual" and "ban" means "card," so Kanban
refers to visual cards. Lean uses visual cards as a signaling system that triggers an action
to supply the process with its needs either from an external supplier or from a warehouse.
F. Toyota Kanban
System
Kanban was originally invented as a part of the famous Toyota Production System.
It is associated with the design of pull systems and the concept of delivering just-in-time
goods. A pull system is where processes are based on customer demand. The concept is
that each process manufactures each component in line with another department to build
a final part to the exact expectation of delivery from the customer. Because your
production process is designed to produce only what is deliverable, your business
becomes leaner as a result of not holding excessive stock levels of raw, partly-finished, or
finished mate Just-in-time is a pull system of production, so actual orders provide a
signal for when a product should be manufactured. Demand-pull enables a firm to
produce only what is required in the correct quantity and at the correct time. This means
that stock levels of raw materials, components, work in progress and finished goods can
be kept to a minimum. This requires a carefully planned scheduling and flow of resources
through the production process.
Modern manufacturing firms use sophisticated production scheduling software to
plan production for each period of time, which includes ordering the correct stock.
Information is exchanged with suppliers and customers through an Electronic Data
Interchange
(EDI)
to
help
ensure
that
every
detail
is
correct.
The most common form of Kanban is a card with data printed on it. The card can vary in
shape, size and content, and its sometimes replaced by other devices, such as golf balls.
To ensure a proper setup of Kanban in the workplace, Toyota has provided us
with six rules for an effective Kanban system:
1.
Customer (downstream) processes withdraw items in the precise
amounts specified by the Kanban.

2.
Supplier (upstream) produces items in the precise amounts and sequences
specified by the Kanban.

3.
No items are made or moved without a Kanban.
4.
A Kanban should accompany each item, every time.
5.
Defects and incorrect amounts are never sent to the next downstream
process.
6.
The number of Kanbans is reduced carefully to lower inventories and to
reveal problems.
To conclude, establishing a Kanban system in your workplace is very useful in
terms of waste reduction and effective utilization of resources.

Small Scale Industries (SSI) constitute an important and crucial segment of
the industrial sector. They play an important role in employment creation, resource
utilization and income generation and helping to promote changes in a gradual and
phased manner. Small-scale industry as a unit employing less than 50 employees if using
power and less than 100 employees. Small scale enterprises are generally more labor
intensive than larger organizations. Every country has set its own parameters in defining
small-scale sector. Generally, small-scale sector is defined in terms of investment ceilings
on the original value of the installed plant and machinery. Fixed capital investment in a
unit has also been adopted as the other criteria to make a distinction between small-scale
and large-scale industries. This limit is being continuously raised up. The technological
characteristics of small scale industry in developing countries is measured in terms of six
specific variables: (a) economies of scale; (b) the technological base; (c) technological
disparity; (d) infrastructural base; (e) learning; (f) industry differentials; (g) labor
intensity; and (h) linkage pattern. First, Economies of scale. Small industrial units are, by
assumption, limited scale manufacturing operations that do only selectively, demonstrate
the typical impact of scale on productivity and output. They emerge and persist in
industries where scale economies are either relatively unimportant or are associated with
limited levels of employment and investment. They also decline whenever scale
economies become significant. Breaking the size barrier is, in fact, a measure of success
of the small industry entrepreneur. Second, Technological base. Small industries are
dependent for their equipment and process technology on a limited number of resources
that start with the entrepreneurs' own technical expertise probably gained during earlier
stages of paid employment. Large firms that provide the technology as a component
within a sub-contracting arrangement. Government institutions desirous to support a
measure of indigenous technology. And although the level of technology associated with
any small industry initiative is a function of all three variables, there is sufficient
evidence to suggest that the first is the prime source of technology in small industry in a
significant number of developing countries. Third, Technological disparity. The generic
term small-scale industry conceals, in fact, three levels of technological sophistication
each related to a specific type of activity: craft production, cottage industries and small
manufacturing. Each of those three is, in fact, a distinct mode of production with different
scale and level of technology parameters. The simplest and least problematic level of
technology is that of crafts. Carpentry, furniture etc demand relatively limited
technological input. Cottage industry demands a relatively higher level while small-scale
industry could demand again comparatively, the highest level of technological input in
the sector. Fourth, Infrastructural base. Experience of a large number of countries in both
Africa and Asia has shown that small industry usually needs a strong infrastructural base,
although this need may vary according to the size and nature of industry. The smaller the
unit and the less formal is its frame, the less the need for this infrastructure. The larger the
unit and the more complex the product or the process, the greater the need for this infra
structural base. Very small and artisanal establishments provide their own power and can
adapt to different types of physical location and shelter. The larger small industries are
very much dependent on the existence of the facilities usually contained within an
industrial estate. Those could be technically oriented services as central repair workshops,
facilities for the bulk purchase of raw material and warehousing facilities or common
facilities as foundries, electroplating shops, tool and die shops, heat treatment shops,
woodworking shops, a quality control laboratory and a special machine shops. Fifth,
Industry differentials. The term forest-based industries conceals, in fact, a number of
different industries with different characteristics. They differ in terms of labor input,
proximity to the raw material base, nature of raw materials used and their utilization
pattern, sensitivity to scale, resort to technology, marketability of output etc. Sixth,
Learning. Technology is prime among these factors while dexterity, learning and quality
of management follow by not too far a distance. This so called learning or experience
impact was traced in large manufacturing operations producing a wide variety of products
from integrated circuits to baby. Small industries in most developing countries are not
susceptible to the learning or experience impact just described. Seventh, Labor intensity.
Aggregate data consistently show that increasing size is associated with decreasing
numbers of workers relative to capital. This labor intensity of small industry is a favorite
argument in favor of the industry and a frequently cited rationale for its stimulation.
Several determinants could actually lead to this labor intensity. One of these could be the
degree of sophistication of utilized technology. Differences in labor intensity may
simply reflect the impact of differences in the wage/rental ratios facing small and large
firms on their choice of both technique and industry. Another determinant may be the
degree of informality of the enterprise, with informal sector enterprises more inclined
towards substituting capital with labor and employing low-skill, minimum wage-tied
labor. And a third possible determinant of this labor intensity could he the economies of
scale that we have mentioned earlier and the fact that certain industries and industrial
branches require considerable capital outlay within a wider span of scale than that
reachable by a small industry. Lastly, Linkage pattern. The probability is high that the
forward linkage of small-scale forest based industries to large scale industries is lower
than their backward linkage.
Camille Gonzales, MBA Candidate

An aspect is a way of viewing a complex system. It is a perspective of a system.
Aspects provide the basis for inquiry to understand and define systems. Predefined
aspects are the 'preconceived notion' required as a starting point for an inquiry process.
The four basic aspects -A. environment-purpose,
B.
function,
C.
process, and
D.
resources& structure
Derived
from
the
most
basic
attributes
of
system
- outputs,
process, and inputs with a purpose in the context of its environment.

For inquiry purposes, these aspects are then defined as variables of a system. To be the
basis for effective inquiry, these variables must be - mutually exclusive, interdependent,
and collectively exhaustive in explaining the system. The inquiry to find the 'truth of the
matter' regarding a system is analogous to solving a multivariate equation.
These variables co-produce one another, therefore, technically, no one
variable dominates others.
The value-add assessment of the activity identifies an activity as one of the

following:
Real-value-add (RVA) activity if it is effective
Business-value-add (BVA) activity if it satisfies the business requirement
Non-value-add (NVA) activity if it do not enhance the customers image of the product or
service
and do not support the business processes.
Value of Storage Activities
Storage activities add no value to the product in the customer's eyes. Storage
activities are not required to support the business process. The storage of the product
(either finished or work-in-progress) indicates problems in the design of the process, and
the organization's ability to anticipate supply and demand for the product.
Value of Transportation Activities
The transport of the product, within a business process, adds nothing to the
product in the customer's view and is not necessary to support the business process. The
movement of work-in-progress is probably due to inefficient process design. The goal in
designing the process is to minimize the amount of movement required in the process.
Value of Inspection Activities
Organizations
may
view
inspection
type
activities
as
valuable
activities. However, from the customer's viewpoint it is wasteful. The activity only
verifies that the product meets the specification. The need to inspect the product
indicates the organization's inability to produce a good product. Inspection activities may
indicate a flaw in the design of the business process.
Most approval processes are also considered wasteful from the customer's point of
view. This is especially true of activities that review and then approve another person's
work (e.g., supervisor approval required for a cashier to accept a customer cheque over a
specified threshold).
Value of Production Activities
Many production activities contribute to the value of the product or support the
business process. Any real-value-add (RVA) or business-value-add (BVA) activity is a
value-add activity. In value-add activities, there may be possibilities for improving the
efficiency and effectiveness of the activity.

Time and motion studies are analyses of the movements made by workers as they
go about their daily routine duties. The studies' purpose is to determine if there are
wasted movements that are repeated and which therefore waste time and reduce the
productivity of the worker. The studies are used to try to set up workspaces in such a way
that a worker can do his/her routine duties as quickly and efficiently as possible.
Small changes, big benefits
Small savings quickly mount up. At the same time, we spend a lot of time in our
lives doing stuff that is not very useful. For example, in your life you spend two months
driving the street in front of your house. Reducing useless tasks or at least doing them
more efficiently can free up huge amounts of time for whats important. Heres a table to
help you work out how much time you could save with modest gains repeatedly
regularly:
The advantages of time and motion study in hospital industry are same as that in
any other industry. These include the following.
1. It improves the methods or procedures adopted in performance of various
2. Improving the lay out of the facility.
jobs.
3. To improve utilization of resources.

4. To reduce human effort by proper design of processes.

Technological characteristics of small scale industry in developing countries
The technological characteristics of small scale industry in developing countries
could, in the author's view, be measured in terms of six specific variables: (a) economies
of scale; (b) the technological base; (c) technological disparity; (d) infrastructural base;
(e) learning; (f) industry differentials; (g) labour intensity; and (h) linkage pattern. The
list is by no means exhaustive but it provides as complete a view as can be, of the
different factors at play in the determination of the technological characteristics of the
sector. We now examine each of those variables closely.
Economies of scale
Small industrial units are, by assumption, limited scale manufacturing operations
that do only selectively, demonstrate the typical impact of scale on productivity and
output. They emerge and persist in industries where scale economies are either relatively
unimportant or are associated with limited levels of employment and investment. They
also decline whenever scale economies become significant. Breaking the size barrier is,
in fact, a measure of success of the small industry entrepreneur.
The experience of Korea and Taiwan (Ho, 1980) could probably be of assistance
in throwing some light on what could be considered, for various industries, the minimum
efficient plant size and in what industries could small scale manufacturing units be
considered efficient.
Korea and Taiwan have experienced a shift from small low technology content
industries in the late fifties and early sixties to large high technology content industries in
the seventies and eighties. Both countries had a strong small industry sector in the sixties
that declined - in terms of total employment - gradually but measurably, over the last two
decades. The share of Korean small enterprises (5-49 employees) declined from 54% in
1958 to 17% in 1975. The identical share of Taiwan small industrial units demonstrated a
parallel decline from 45% 1954 to 26% in 1961 (Ibid).
Technological base
Small industries are dependent for their equipment and process technology on a
limited number of resources that start with (a) the entrepreneurs' own technical expertise
probably gained during earlier stages of paid employment (Schmitz, 1982); (b) large
firms that provide the technology as a component within a sub-contracting arrangement
(Ibid); (c) government institutions desirous to support a measure of indigenous
technology. And although the level of technology associated with any small industry
initiative is a function of all three variables, there is sufficient evidence to suggest that the
first is the prime source of technology in small industry in a significant number of
developing countries.
Technological skill, know-how development, and their promotion in
developing countries
Technology, for the small entrepreneur, is simply knowledge essential for the
conduct of a productive function. It includes: (a) Industry specific knowledge; (b)
Product-system-related knowledge; (c) Firm-specific knowledge; and, finally, (d) Ongoing problem-solving capability or skill essential for solving management problems.
Technology viewed within this context has a soft as well as a hard
component. The soft component relates to the human capability generation process linked
to the absorption and management of the technology. The hard components focuses on
the essential technological processes and equipment utilized in the manufacturing
process. Both components are of equal significance. They could be either transferred or
generated domestically. Transfer has provided the answer for decades. Development and
generation receive contemporary attention. The following discussion treats technological
skill as a function of both the transfer as well as the domestic development process.
Revenue and Profitability
Small-scale business revenue is generally lower than companies that operate on a

larger scale. The Small Business Administration classifies small businesses as companies
that bring in less than a specific amount of revenue, depending on the business type. The
maximum revenue allowance for the small business designation is set at $21.5 million per
year for service businesses.
Lower revenue does not necessarily translate into lower profitability. Established
small-scale businesses often own their facilities and equipment outright, which, in
addition to other factors, helps to keep costs lower than more leveraged businesses.
Employees
Small-scale businesses employ smaller teams of employees than companies that
operate on larger scales. The smallest businesses are run entirely by single individuals or
small teams. A larger small-scale business can often get away with employing fewer than
one hundred employees, depending on the business type.
Market Area
Small-scale businesses serve a much smaller area than corporations or larger
private businesses. The smallest-scale businesses serve single communities, such as a
convenience store in a rural township. The very definition of small-scale prevents these
companies from serving areas much larger than a local area, since growing beyond that
would increase the scale of a small business's operations and push it into a new
classification.
Ownership and Taxes
The corporate form of business organization is not well-suited to small-scale
operations. Instead, small-scale businesses prefer to organize as sole proprietorships,
partnerships or limited liability companies. These forms of organization provide the
greatest degree of managerial control for company owners, while minimizing the hassle
and expense of business registration.
These businesses generally do not file their own taxes; instead, company owners report
business income and expenses on their personal tax returns.
Locations
A small-scale business, by definition, can be found only in a limited area. These
companies are not likely to have sales outlets in multiple states or countries, for example.
A large number of small-scale businesses operate from a single office, retail store or
service outlet. It is even possible to run a small business directly out of your home,
without any company facilities.
Joel M. Manalo, MBA Candidate

Have you ever wondered how an organization decides which products and
services to develop, price, promote, and sell? Organizations typically develop plans and
strategies that outline how they want to go about this process. Such a plan must take into
account a companys current internal conditions, such as its resources, capabilities,
technology, and so forth. The plan must also take into account conditions in the external
environment, such as the economy, competitors, and government regulations that could
affect what the firm wants to do. Just as your personal plans such as what you plan to
major in or where you want to find a job are likely to change, organizations also have
contingency plans. Individuals and organizations must develop long term (longer than a
year) strategic plans, match their strengths and resources to available opportunities, and
adjust their plans to changing circumstances as necessary.
Individual buyers and organizational buyers both evaluate products and services
to see if they provide desired benefits. For example, when youre exploring your vacation
options, you want to know the benefits of each destination and the value you will get by
going to each place. Before you (or a firm) can develop a strategy or create a strategic
plan, you first have to develop a value proposition. A value proposition is a thirty-second
elevator speech stating the specific benefits a product or service offering provides a
buyer. It shows why the product or service is superior to competing offers. The following
is an example of a value proposition developed by a sales consulting firm: Our clients
grow their business, large or small, typically by a minimum of 30 50% over the previous
year. They accomplish this without working 80 hour weeks and sacrificing their personal
lives.
Note that although a value proposition will hopefully lead to profits for a firm,
when the firm presents its value proposition to its customers, it doesnt mention its own
profits. Thats because the goal is to focus on the external market, or what customers
want.
In order to determine whether or not a given project is feasible, there must be
some form of investigation into the goals and implications of the project. For very small
scale projects this may not be necessary at all as the scope of the project is easily
understood. In larger projects, the feasibility may be done but in an informal sense, either
because there is not time for a formal study or because the project is a must-have and
will have to be done one way or the other.
When a Project is carried out, there are four main areas of consideration:
Technical is the project technically possible?
Financial can the business afford to carry out the project?
Organizational will the new system be compatible with existing practices? Ethical is
the impact of the new system socially acceptable?
To answer these questions, the feasibility study is effectively a condensed version
of a fully blown systems analysis and design. The requirements and users are analyzed to
some extent, some business options are drawn up and even some details of the technical
implementation. The product of this stage is a formal feasibility study document.
SSADM specifies the sections that the study should contain including any preliminary
models that have been constructed and also details of rejected options and the reasons for
their rejection.
Stage 1 Investigation of the current environment
The developers of SSADM understood that in almost all cases there is some form
of current system even if it is entirely composed of people and paper. Through a
combination of interviewing employees, circulating questionnaires, observations and
existing documentation, the analyst comes to full understanding of the system as it is at
the start of the project. This serves many purposes.
Stage 2 Business system options
Having investigated the current system, the analyst must decide on the overall
design of the new system. To do this, he or she, using the outputs of the previous stage,
develops a set of business system options. These are different ways in which the new
system could be produced varying from doing nothing to throwing out the old system
entirely and building an entirely new one. The analyst may hold a brainstorming session
so that as many and various ideas as possible are generated.
The ideas are then collected to options which are presented to the user. The
options consider the following:
The degree of automation
The boundary between the system and the users
The distribution of the system, for example, is it centralized to one office or
spread
out across several?

Cost/benefit
Impact of the new system
Where necessary, the option will be documented with a logical data structure and
a level 1 data-flow diagram.
The users and analyst together choose a single business option. This may be one
of the ones already defined or may be a synthesis of different aspects of the existing
options. The output of this stage is the single selected business option together with all
the outputs of the feasibility stage.
Stage 3 Requirements specification
This is probably the most complex stage in SSADM. Using the requirements
developed in stage 1 and working within the framework of the selected business option,
the analyst must develop a full logical specification of what the new system must do. The
specification must be free from error, ambiguity and inconsistency. By logical, we mean
that the specification does not say how the system will be implemented but rather
describes what the system will do.
To produce the logical specification, the analyst builds the required logical models
for both the data-flow diagrams (DFDs) and the Logical Data Model(LDM), consisting of
the Logical Data Structure (referred to in other methods as entity relationship diagrams)
and full descriptions of the data and its relationships. These are used to produce function
definitions of every function which the users will require of the system, Entity LifeHistories (ELHs) which describe all events through the life of an entity, and Effect
Correspondence Diagrams (ECDs) which describe how each event interacts with all
relevant entities. These are continually matched against the requirements and where
necessary, the requirements are added to and completed.
The product of this stage is a complete requirements specification document
which is made up of:
the updated data catalogue
the updated requirements catalogue
the processing specification which in turn is made up of
user role/function matrix
function definitions
required logical data model
entity life-histories
effect correspondence diagrams

Though some of these items may be unfamiliar to you, it is beyond the scope of
this unit to go into them in great detail.

Stage 4 Technical system options
This stage is the first towards a physical implementation of the new system. Like
the Business System Options, in this stage a large number of options for the
implementation of the new system are generated. This is narrowed down to two or three
to present to the user from which the final option is chosen or synthesized.
However, the considerations are quite different being:
the hardware architectures
the software to use
the cost of the implementation
the staffing required
the physical limitations such as a space occupied by the system
the distribution including any networks which that may require
the overall format of the human computer interface
All of these aspects must also conform to any constraints imposed by the business
such as available money and standardization of hardware and software.
The output of this stage is a chosen technical system option.
Stage 5 Logical design
Though the previous level specifies details of the implementation, the outputs of
this stage are implementation-independent and concentrate on the requirements for the
human computer interface. The logical design specifies the main methods of interaction
in terms of menu structures and command structures.
One area of activity is the definition of the user dialogues. These are the main interfaces
with which the users will interact with the system. Other activities are concerned with
analyzing both the effects of events in updating the system and the need to make inquiries
about the data on the system. Both of these use the events, function descriptions and
effect correspondence diagrams produced in stage 3 to determine precisely how to update
and read data in a consistent and secure way.
The product of this stage is the logical design, which is made up of:
Data catalogue
Required logical data structure
Logical process model includes dialogues and model for the update and inquiry
processes
Stress & Bending moment.

Stage 6 Physical design
This is the final stage where all the logical specifications of the system are
converted to descriptions of the system in terms of real hardware and software. This is a
very technical stage and a simple overview is presented here.
The logical data structure is converted into a physical architecture in terms of
database structures. The exact structure of the functions and how they are implemented is
specified. The physical data structure is optimized where necessary to meet size and
performance requirements.
The product is a complete Physical Design, which could tell software engineers how to
build the system in specific details of hardware and software and to the appropriate
standards.
A good way to think of a business is to imagine inputs entering an imaginary
black box. What come out of the box are outputs. The black box is the business what is
does how it does it and so on.
A business needs resources in order to trade. The activities of a new business
should be designed to turn those resources into products and services that customers are
willing to pay for. This process is known as the "transformation process".
If the value of what customers pay for the outputs is more than the cost of the
inputs, then the business can be said to have "added value".
So, in summary, the transformation process is about adding value.
That sounds pretty theoretical. So, let's take a look at some practical examples of
what is involved in the transformation process.
Inputs to the transformation process

In order to make products and deliver services, a business needs resources i.e.
inputs. The textbooks often refer to these as "factors of production", which is a slightly
boring way of describing real resources such as:
Labor the time and effort of people involved in the business: employees, suppliers etc
Land think of this as the natural resources that are used by the business e.g. actual
land, energy, and other natural resources
Capital capital includes physical assets such as machinery, computers, transport which
are used during production. Capital can also include finance the investment that is
required in order for the business activities to take place.
Enterprise enterprise is the entrepreneurial "fairy-dust" that brings together or
organizes the other inputs. The entrepreneur takes the decisions about how much capital,
what kind of labor etc and how & when they are needed in the business. You will
probably agree that enterprise is the most important input for a successful business.
Inputs by themselves are rarely enough for a start-up to succeed. They need to be the
right kind of inputs, in the right mix. So, for example, a successful entrepreneur will be
keen to ensure:
High quality people are employed (the best the business can afford at each stage of
development) and that these people are retained and invested in (training)
Capital investment is focused on efficiency and quality use of modern machinery or
IT systems of the right kind can have a significant effect whether a small business is able
to compete
Outputs from the transformation process - The outputs of business activities are
reflected in the products and services sold to customers. It is quite useful to think of ways
in which similar business activities can be grouped based on those outputs.
Economists and business examiners alike have traditionally categorized the

outputs from the transformation process into these three groups:
Increasing market demand towards higher product and process quality and
efficiency forces companies to think of new and innovative ways to optimize their
production. In the area of high-tech manufacturing products, even slight variations of the
product state during production can lead to costly and time-consuming rework or even
scrap age. Describing an individual products state along the entire manufacturing
programmed, including all relevant information involved for utilization, e.g., in-process
adjustments of process parameters, can be one way to meet the quality requirements and
stay competitive. Ideally, the gathered information can be directly analyzed and in case of
an identified critical trend or event, adequate action, such as an alarm, can be triggered.
Traditional methods based on modeling of cause-effect relations reaches its limits due to
the fast increasing complexity and high-dimensionality of modern manufacturing
programmed. There is a need for new approaches that are able to cope with this
complexity and high-dimensionality which, at the same time, are able to generate
applicable results with reasonable effort. Within this paper, the possibility to generate
such a system by applying a combination of Cluster Analysis and Supervised Machine
Learning on product state data along the manufacturing programmed will be presented.
After elaborating on the different key aspects of the approach, the applicability on the
identified problem in industrial environment will be discussed briefly.
Ma. Cristina C. Santos, MBA Candidate

Just-in-time (JIT) is an inventory strategy used by companies to increase good
inventory system and decrease wastages by having stocks that are just needed in the
production. Using a JIT system the purchaser or manager must have good and accurate
forecasting on demand. He must know the days and month that needs a greater inventory
level and to when is the slack season.
For instance in a fast-food establishment specifically who offers pizza and pasta.
As a new manager I must know when to order big inventory for my bulk orders, and also
I have to know when I am going to order a minimal inventory in order to avoid shortage
of stocks. In order to forecast correctly I need to know the history of orders from last
year, I need to know the history of this store in terms of purchasing. And one thing I need
to know how frequent the delivery of wet goods and dry goods is in a week. I also have to
know how long the chicken, dough, cheese, bacon, sauces and drinks last. For instance on
ber months especially October to December I need to order more stocks due to demand
is high because of different parties. For the history of my history I need to have a stocks
of at least 5 crates of chicken and 2 caseof noodles and 5 case of every size of dough
except for 15 inches because delivery of wet products are very other day and no delivery
on Sundays. On November to December I need to have a more stocks of chicken and
noodles due to more bulk orders of set meals than pizza for schools Christmas party and
company parties. And on December there are times that delivery of goods are delayed
due to pick season. Here comes January up to April purchase of goods need to lessen in
order for us to avoid high wastages because demands also decrease. However in
preparation for February 14, the Hearts day celebration we need to increase orders to
meet the demand on that date. We usually have a good dale on this date. After this date
the next month that has a big sale is on May and June, we have to order a little higher
compare to the regular order from the first months of the year. And after those months we
go back on our regular inventory level.
Maintenance programmed has been implemented to overcome the problems
which is related to equipment breakdown. Many management personnel or owners often
view maintenance works as an expense, unknowing its longer positive effect. Proper
maintenance of plant equipment can significantly reduce the overall operating cost, while
productivity is boosting. Maintenance efficiency can affect the business effectiveness and
integrity. Just for instance if you dont schedule plant or equipment maintenance for a
year and on the time of your peak season the machine breakdown will be more costly for
the company due to production delay or we will not meet the lead time given. There are
different kinds of maintenance programmed. Breakdown maintenance take effect only
when the machine or equipment needs to be fixed. There is also what we call preventive
maintenance where there is a predetermined period. In this kind of maintenance there is
an overhaul check-up of all equipment. They inspect the equipment for fixing and
changing of parts. In our company (fast-food that offers pizza and pasta), we have a
preventive maintenance schedule. They have specific date and frequency when a
maintenance of our equipment will be done. The usual equipment that needs a frequent
preventive maintenance are the retarder where pizza are done, our freezer, chiller and air
condition units. This are the main equipment of the store that will cost us big when they
breakdown. For instance if the freezer has malfunction the sauces, chicken, pan and the
dough will be wasted because they cant be store longer outside the freezer. The chiller is
also very important in the store because it gives the right temperature in thawing the
frozen chicken, dough and sauces. And the retarder needs to be maintained every month
because it where the pizza is cooked to taste its freshness. And one of the important thing
are POS (point of sale machine), it is where we monitor sale and if it breakdown it will be
a very difficult task to work back sale and inventory that is why it also has a software and
hardware maintenance schedule every month. However some tools and equipment are on
the breakdown maintenance strategy, such as the blender, dispenser and other. They are
given much attention when they are needed to repair and replace because there still have
an alternative. This are the importance of maintenance programmed. They may cost us
however it is for our companys effectiveness and efficiency in meeting the demands. We
have to take good care of them because they are the materials in doing our business well.
Small scale industry is described according into what country you are referring to.
For instance in India, small scale industry is an industrial under taking in which
investment in fixed assets in plant and machinery, whether held on ownership term, lease
or hire purchase should not be more than Rs 10 million. It must have less than 150
employees per unit. However they produce more employment opportunities because the
job is more on labor intensive such as handicraft. Small scale industry is light and
limited capital that is why the return of investment has a quick return. It also requires less
machines and technical skills.
Small scale industry support and promote exportation and mobilization of local
resources.
Appropriate process technology for small scale industry fits flexible
manufacturing systems. Markets now a day become more intense in competition. They
become more complex, quality is not only they required but also speed of delivery. We
have to be more flexible which means that we have to produce more goods, affordable
and high quality.
Motion study involves the study of motion of an operation (time study notes the
time involved in carrying out each element of operation).
Motion study aims to reduce wastage of time and materials scrapping the
unnecessary movements (time study aims of fixing the standard time for carrying out a
job).
Motion study is suitable for all types of jobs (time study is not suitable for
workers where quality is prime consideration).
Motion study offers a great potential for savings in any area of human effort. We
can reduce the cost by combining elements of one task with elements of another. It uses
the principle of motion economy to develop work stations that are friendly to the human
body and efficient in their operation. It considers the operators safety. Motion study is a
detailed analysis of the work methods in an effort to improve it.
For instance, a manufacturing company using motion study will develop the best
work method. They also develop motion consciousness on the part of all employees to
avoid accident, stoppage or delay of work. They also develop economical and efficient
tools, fixtures and production aids to help the production. It will assist them in selecting
new machines and equipment for production and train new employees in the preferred
method. This will reduce the effort to be exerted and the cost to be incurred or expended.
Reynaldo Angara, MBA Candidate
There are three main types of process: job, batch and flow production.
a. Job production the creation of single items by either one operative or a team
of operatives. It requires the complete attention of the operative before he or she
passes on to the next job. This is beneficial to the customer as it exactly matches
the expectations of the customer. As the work is concentrated on a specific unit,
supervision and inspection of work are relatively simple. It will also provide
employees with a greater level of satisfaction in their job because they are a part of
a team working towards the same aim.
b. Batch production refers to a specific group of components, which go
through a production process together. As one batch finishes, the next one starts.
For example, on production of mannequin, one starts with the heads on Monday,
on Tuesday, another batch works on the body and so on.
This method is
sometimes referred to as intermittent production as different job types are held as

work-in-progress between the various stages of production. It is suitable for a
wide range of almost similar goods, which use the same machinery on different
settings.
c. Flow production a continuous process of parts and sub-assemblies passing

on from one stage to another until completion. Units are worked upon in each
operation and then passed straight on to the next work stage without waiting for
the batch to be completed.
Just-in-time (JIT) inventory refers to an inventory management system with

objectives of having inventory readily available to meet demand, but not to a point
of excess where you must stockpile extra products. Maintaining inventory takes
time and has costs, which is what motivates companies to implement JIT
programs. Balancing the goals of avoiding stock outs while minimizing inventory
costs is at the heart of just-in-time inventory. One of the main benefits of
automated and efficient inventory replenishment systems is that you can quickly
respond to reduced inventory levels. Companies are now equipped to pull back on
stock in a given product category and ramp up inventory in another as customer
needs and interests change. Minimization of inventory management costs is a
primary driver and benefit of just-in-time practices. Inventory management has
costs, and when you reduce the amount of holding space and staff required with
JIT, the company can invest the savings in business growth and other
opportunities, points out the Accounting for Management website. You also have
less likelihood of throwing out product that gets old or expires, meaning reduced
waste.
a. Environment considerations such as employees safety, light conditions,

ventilation, temperature, noise, etc.
b. building if it has been already selected, its characteristic will be a constraint
at the moment of designing the layout, which is different if the building has to
be built
c. Materials size, shape, volume, weight and the physical-chemical
characteristics will influence the manufacturing methods and storage and
material handling processes. The sequence and order of the operations will
affect plant layout as well, taking into account the variety and quantity to
produce
d. machinery, tools and necessary equipments we have to consider the space
required, shape, height, weight, quantity and type of workers required, risks for
the personnel, requirements of auxiliary services, etc.\
Motion study was developed by Frank B. Gilbreth and Lillian M. Gilbreth

and consists of a wide variety of procedures for the description, systematic
analysis, and means of improving work methods. It is difficult to separate these
two aspects completely. Therefore, the combined term usually refers to all three
phases of the activity: method determination, time appraisal, and development of
material for the application of these data. Frank and Lillian also broadened
scientific management by including the human element, therefore using
psychology to gain the cooperation of employees. Motion and time analysis could
be used to help find a preferential way of doing the work and could assist in
effectively managing or controlling the activity. This approach has been
successfully applied to factories, hospitals, department stores, housework, banks,
cafeteria work, libraries, music, and to many other human activities. For instance,
factories have used it to reduce wasted time and improve the time to compete a
task, while banks use it to help team members reach their sales goals. However,
the goal of a time and motion study is not simply efficiency. These studies are
done to create a baseline that can be used in the future when evaluating procedural,
equipment, or personnel changes. The goal can be to understand the skills required
to enable individuals to perform the work and, thus, to provide the correct training.
Another may be to reduce the discomfort experienced, especially in the case of
surgical proceduresa goal such as this, namely, to create less tissue damage, may
run counter to efficiency. In the case of athletes, the goal may be faster speed or
more endurance, which may be achieved not necessarily by the most efficient way.
Sally Nino, MBA Candidate
Systems design is the process of defining the architecture, components,

modules, interfaces, and data for a system to satisfy specified requirements.
Systems design could be seen as the application of systems theory to product
development.
There
is
some
overlap
with
the
disciplines
of systems
analysis, systems architecture and systems engineering.

If the product development "blends the perspective of marketing, design,
and manufacturing into a single approach to product development, then design is
the act of taking the marketing information and creating the design of the product
to be manufactured. Systems design is therefore the process of defining and
developing systems to satisfy specified requirements of the user.
Until the year 1990s, systems design had a crucial and respected role in
the data processing industry. In the 1990s standardization of hardware and
software resulted in the ability to build modular systems. The increasing
importance of software running on generic platforms has enhanced the discipline
of software engineering.
The architectural design of a system emphasizes on the design of

the systems architecture which
the structure, behavior, and more views of that
system and analysis. One example is the system we use in collecting past due
acct. We are using CAMS (Collections and Assets Management System). Thru
this system, by searching the account name, we can easily get the details we
need in order to relay it to client the amount due , no. of days delayed, total
amount due, and total outstanding balance. We were able to note all the
conversation made by the clients.
Logical design
The logical design of a system pertains to an abstract representation of the
data flows, inputs and outputs of the system. This is often conducted via
modelling, using an over-abstract (and sometimes graphical) model of the actual
system..
Physical design
1.
The physical design relates to the actual input and output processes of the
system. This is explained in terms of how data is input into a system, how it is
verified/authenticated, how it is processed, and how it is displayed as In
Physical design, the following requirements about the system are decided
2.
Input requirement, - such as the details needed to fill up the box in order to know
the identity of each account. Example of this is the system using in collection dept. of
course the very important details are personal information of clients, product of loans,
amount of loans terms, description of loans
depending what products.
3.
Output requirements, - referring to the details needed to come out upon

searching an account. If the system will be used in collecting past due account,
the very important detail needed to arise should be present.
4.
Storage requirements, - The loading capacity of a system that can store
5.
Processing Requirements Refers to the information that the users want to

search.
6.
System control and backup or recovery. Referring to the control of IT

department , that no such information can be edited by the users./ back up of
recovery is important so that when the system is down, we can recover the data
and not totally lost.
The physical portion of systems design can generally be broken down into
three sub-tasks:
1. User Interface Design - is concerned with how users add information to the
system and with how the system presents information back to them.
2. Data Design - Data Design is concerned with how the data is represented and
stored within the system.
3. Process Design - Process Design is concerned with how data moves through
the system, and with how and where it is validated, secured and/or
transformed
the systems design
produced and made
as it flows into, through and out of the system. At the end of

phase, documentation describing the three sub-tasks is
available for use in the next phase.
Physical design, in this context, does not refer to the tangible physical
design of an information system. To use an analogy, a personal computer's
physical design involves input via a keyboard, processing within the CPU, and
output via a monitor, printer, etc. It would not concern the actual layout of the
tangible hardware, which for a PC would be a monitor, CPU, motherboard, hard
drive, modems, video/graphics cards, USB slots, etc. It involves a detailed design
of a user and a product database structure processor and a control processor. The
H/S personal specification is developed for the proposed system.
1) Benchmarking is the process of comparing one's business processes

and performance metrics to industry bests or best practices from other companies.
Dimensions typically measured are quality, time and cost. In the process of best
practice benchmarking, management identifies the best firms in their industry, or
in another industry where similar processes exist, and compares the results and
processes of those studied (the "targets") to one's own results and processes. In this
way, they learn how well the targets perform and, more importantly, the business
processes that explain why these firms are successful.
Benchmarking
is
used
specific indicator (cost per unit of
to
measure
performance
using
measure, productivity per unit of measure,
cycle time of x per unit of measure or defects per unit of measure) resulting in a
metric of performance that is then compared to others.[1]
Also
referred
to
as
"best
practice
benchmarking"
or
"process
benchmarking", this process is used in management and particularly strategic

management, in which organizations evaluate various aspects of their processes in
relation to best practice companies' processes, usually within a peer group defined
for the purposes of comparison. This then allows organizations to develop plans on
how to make improvements or adapt specific best practices, usually with the aim
of increasing some aspect of performance. Benchmarking may be a one-off event,
but is often treated as a continuous process in which organizations continually
seek to improve their practices.
2)
Computer programming (often shortened to programming) is a
process that leads from an original formulation of a
computing problem
to executable computer programs. Programming involves activities such as

analysis, developing understanding, generating algorithms, verification of
requirements of algorithms including their correctness and resources consumption,
and implementation (commonly referred to as coding [1][2]) of algorithms in a
target programming language. Source code is written in one or more programming
languages. The purpose of programming is to find a sequence of instructions that
will automate performing a specific task or solving a given problem. The process
of programming thus often requires expertise in many different subjects, including
knowledge of the application domain, specialized algorithms and formal logic.
Related tasks include testing, debugging, and maintaining the source code,
implementation of the build system, and management of derived artifacts such
as machine code of computer programs. These might be considered part of the
programming process, but often the term "software development" is used for this
larger process with the term "programming", "implementation", or "coding"
reserved
for
the
actual
writing
engineering combines engineering techniques
of
source
with software
code. Software
development
practices.
3) Design is the creation of a plan or convention for the construction of an
object or a system (as in architectural blueprints, engineering drawings, business
processes, circuit
diagrams and sewing
patterns).[1] Design
has
different
connotations in different fields (see design disciplines below). In some cases the
direct construction of an object (as in pottery, engineering, management, cowboy

coding and graphic design) is also considered to be design.
Designing often necessitates considering the aesthetic, functional, economic
and sociopolitical dimensions of both the design object and design process. It may
involve considerable research, thought, modeling, interactive adjustment, and redesign.
Meanwhile,
diverse
including clothing, graphical
kinds
of
user
objects
may
be
designed,
interfaces, skyscrapers, corporate
identities, business processes and even methods of designing.

4)
Requirements
analysis in systems
engineering and software
engineering, encompasses those tasks that go into determining the needs or

conditions to meet for a new or altered product or project, taking account of the
possibly
conflicting requirements of
the
various stakeholders, analyzing,
documenting, validating and managing software or system requirements.

Requirements analysis is critical to the success of a systems or software
project. The requirements should be documented, actionable, measurable, testable,
traceable, related to identified business needs or opportunities, and defined to a
level of detail sufficient for system design.
5)
A system architecture or systems architecture is the conceptual
model that defines the structure, behavior, and more views of a system.
An
architecture description is a formal description and representation of a system,

organized in a way that supports reasoning about the structures and behaviors of
the system.
A system architecture can comprise system components, the externally
visible properties of those components, the relationships between them. It can
provide a plan from which products can be procured, and systems developed, that
will work together to implement the overall system. There have been efforts to
formalize languages to describe system architecture, collectively these are

called architecture description languages.
6)
System testing of software or hardware is testing conducted on a
complete, integrated system to evaluate the system's compliance with its

specified requirements. System testing falls within the scope of black box testing,
and as such, should require no knowledge of the inner design of the code or logic.
As a rule, system testing takes, as its input, all of the "integrated" software
components that have passed integration testing and also the software system itself
integrated with any applicable hardware system(s). The purpose of integration
testing is to detect any inconsistencies between the software units that are
integrated together (called assemblages) or between any of the assemblages and
the hardware. System testing is a more limited type of testing; it seeks to detect
defects both within the "inter-assemblages" and also within the system as a whole.
System testing is performed on the entire system in the context of
a Functional
Requirement Specification(s)
(FRS)
and/or
a System
Requirement Specification (SRS).

System testing tests not only the design, but also the behaviour and even the
believed expectations of the customer. It is also intended to test up to and beyond
the bounds defined in the software/hardware requirements specification(s).
Any production process involves a series of links in a production chain. At

each stage value is added in the course of production. Adding value involves
making a product more desirable to a consumer so that they will pay more for it.
Adding value therefore is not just about manufacturing, but includes the marketing
process including advertising, promotion and distribution that make the final
product more desirable.
It is very important for businesses to identify the processes that add value,
so that they can enhance these processes to the ongoing benefit of the business.
There are three main types of process: job, batch and flow production.
Job production:
Job or 'make complete' production is the creation of single items by either
one operative or a team of operative's . It is possible for a number of identical units
to be produced in parallel under job production. Several frigates of a similar type.
Smaller projects can also be seen as a form of job production, Job production is
unique in the fact that the project is considered to be a single operation, which
requires the complete attention of the operative before he or she passes on to the
next job. A good example of this is producing a vehicle. Assembling of this
vehicle consist of different parts and accessories. Labor for installing parts and
accessories that work consist of three or more mechanics to complete product.
The cost of materials that used in producing vehicle and the cost of labor be added
to the value of a vehicle.
Batch production
The term batch refers to a specific group of components, which go through
a production process together. As one batch finishes, the next one starts.
For example on Monday, Machine A produces a type 1 engine part, on
Tuesday it produces a type 2 engine part, on Wednesday a type 3 and so on. All
engine parts will then go forward to the final assembly of different categories of
engine parts.
Batches are continually processed through each machine before moving on

to the next operation. This method is sometimes referred to as 'intermittent'
production as different job types are held as work-in-progress between the various
stages of production.
The benefits of batch production are:
1.
It is particularly suitable for a wide range of almost similar goods, which can
use the same machinery on different settings. For example batches of letters
can be sent out to customers of an insurance company.
2.
It economizes upon the range of machinery needed and reduces the need for a
flexible workforce.
3.
Units can respond quickly to customer orders by moving buffer stocks of

work-in-progress or partly completed products through the final production
stages.
4.
It makes possible economies of scale in techniques of production, bulk

purchasing and areas of organization.
Just-in-time (JIT) manufacturing requires making a product or service only

when the customer, internal or external requires it. It uses a product layout with a
continuous flow, one with no delays once production starts. This means a
substantial reduction in setup costs is necessary to eliminate the need to produce in
batches;
therefore,
processing
systems
must
be
reliable.
Just-in-time
manufacturing is simple in theory but hard to achieve in practice. Some

organizations hesitate to implement JIT because with no work in-process
inventory a problem anywhere in the system can stop all production. For this
reason, organizations that use just-in-time manufacturing must eliminate all
sources of failure in the system. The production process must be redesigned so

that it is not prohibitively expensive to process one or a small number of items at a
time. This usually means reducing the distance over which work-in-process has to
travel and using very adaptable people and equipment that can handle all types of
jobs.
At the core of the JIT process is a highly trained work force whose task is
to carry out activities using the highest standards of quality. When an employee
discovers a problem with a component he or she has received. It is the
responsibility of that employee to call immediate attention to the problem so that it
can be corrected.
Suppliers must be able to produce and deliver defect- free materials or
components just when they are required. In many instances, companies compete
with suppliers of the same components to see who can deliver the best quality. At
the end of a performance period, the supplier who performs the best will obtain a
long term contract. Preventive maintenance is also employed so that equipment
failure is a rare event.
Economies of scale
Small industrial units are, by assumption, limited scale manufacturing
operations that do only selectively, demonstrate the typical impact of scale on
productivity and output. They emerge and persist in industries where scale
economies are either relatively unimportant or are associated with limited levels of
employment and investment. They also decline whenever scale economies become
significant. Breaking the size barrier is, in fact, a measure of success of the small
industry entrepreneur.
Technological base
Small industries are dependent for their equipment and process technology
on a limited number of resources that start with (a) the entrepreneurs' own
technical expertise probably gained during earlier stages of paid employment; (b)
large firms that provide the technology as a component within a sub-contracting
arrangement; (c) government institutions desirous to support a measure of
indigenous technology. And although the level of technology associated with any
small industry initiative is a function of all three variables, there is sufficient
evidence to suggest that the first is the prime source of technology in small
industry in a significant number of developing countries. Thorough knowledge of
the production process tends to be the small producers' strong point. The most
important source of skill and know how found was previous wage employment.
The training and experience gained in this way varied with the job previously held,
but generally it provided a sufficient basis to pick up the missing technical aspects
through a process of learning by doing, which was an integral part of the small
producers' struggle for survival or expansion.
Technological disparity
The generic term small-scale industry conceals, in fact, three levels of
technological sophistication each related to a specific type of activity: craft
production, cottage industries and small manufacturing. Each of those three is, in
fact, a distinct mode of production with different scale and level of technology
parameters.
Infrastructural base
Experience of a large number of countries in both Africa and Asia has
shown that small industry usually needs a strong infrastructural base, although this
need may vary according to the size and nature of industry. The smaller the unit
and the less formal is its frame, the less the need for this infrastructure. The larger
the unit and the more complex the product or the process, the greater the need for
this infra structural base. Very small and artisanal establishments provide their
own power (mechanical, hand or generator) and can adapt to different types of
physical location and shelter. The larger small industries are very much dependent
on the existence of the facilities usually contained within an industrial estate.
Those could be technically oriented services as central repair workshops, facilities
for the bulk purchase of raw material and warehousing facilities or common
facilities as foundries, electroplating shops, tool and die shops, heat treatment
shops, woodworking shops, a quality control laboratory and a special machine
shops. Although industrial estates are usually the focus of all these facilities, a
UNIDO exploration of the relevance and effectiveness of industrial estates for
small industry development has revealed, however, that industrial estates had little
success in attracting industry to rural areas
Industry differentials
The term forest-based industries conceals, in fact, a number of different
industries with different characteristics. They differ in terms of labour input,
proximity to the raw material base (the forest), nature of raw materials used and
their utilization pattern, sensitivity to scale, resort to technology, marketability of

output etc.
Learning
Contemporary and not that distant research has revealed the existence of a
measure of correlation between average total or partial cost of production of a
product and the cumulative volume of production. Average total cost declines with
increase in volume not only as a result of economies of scale but also as a response
to four other factors that have proved instrumental in causing a cost decline.
Technology is prime among these factors while dexterity, learning and quality of
management follow by not too far a distance. This so called learning or experience
impact was traced in large manufacturing operations producing a wide variety of
products from integrated circuits to baby food.
The author strongly feels, although admittedly has yet to accumulate

empirical evidence, that small industries in most developing countries are not
susceptible to the learning or experience impact just described. The reasons for
that are the following: first is the fact that many small scale industries, also in the
forest sector, do not lend themselves to large scale operations. Second is the
frequently observed low level of technological input and technological adaptation
in many of those industries. Third is the long established high labour intensity and
low labour dexterity, in many of those industries.
Fourth is the often cited constrained managerial performance of the great majority
of these units. And fifth, and last, is the limited scope for learning given the
environmental constraints of the industries. As said earlier, precious little empirical
evidence is there to support the suggested relationship between learning and the
small scale industry sector in developing countries. Suggestive evidence is,
however, there.
Labour intensity
Aggregate data consistently show that increasing size is associated with
decreasing numbers of workers relative to capital. This labour intensity of small
industry is a favourite argument in favour of the industry and a frequently cited
rationale for its stimulation. Several determinants could actually lead to this labour
intensity. One of these could be the degree of sophistication of utilized
technology. Differences in labour intensity may simply reflect the impact of
Differences in the wage/rental ratios facing small and large firms on their choice
of both technique and industry. Another determinant may be the degree of
informality of the enterprise, with informal sector enterprises more inclined
towards substituting capital with labour and employing low-skill, minimum wagetied labour. And a third possible determinant of this labour intensity could he the
economies of scale that we have mentioned earlier and the fact that certain
industries and industrial branches require considerable capital outlay within a
wider span of scale than that reachable by a small industry.
Linkage pattern
The probability is high that the forward linkage of small-scale forest based
industries to large scale industries is lower than their backward linkage. This is due
to the non-forest-based raw material purchase by SSI manufacturers. The extent of
the linkage may depend on the level of subcontracting that exists between small
and large scale manufacturers although links through the open market could also
be.
An ever elusive technology

Technology is a scarce commodity in small industry in most developing
countries. Barriers, and there are many of them, restrain the flow and inhibit the
access of the entrepreneur to this technology. There are source-related barriers,
investment-related barriers, market-related barriers, development-related barriers
and access-related barriers. A source related barrier is that resulting from a
reluctance of the large industry to provide essential production technologies to the
small firm out of a restrictive attitude towards technology dissemination or fear of
outright competition or rivalry. Some of these source-related barriers are
institutionalized and have deep roots in developed country technology export
restriction regulations. Investment related barriers arise from the existence of a
prohibitive price for the technological input, a price that is beyond the financial
capabilities of the small enterprise. Market structure barriers reflect a high
measure of concentration that converts the small industrial unit into a marginal
player with no virtual impact on technology transfer or development. For small
enterprises the adoption of the latest technology means a discontinuous leap from
their previous technology
Richniel dela Torre, MBA Candidate
Just-in-time manufacturing was a concept introduced to the United States

by the Ford motor company. It works on a demand-pull basis, contrary to hitherto
used techniques, which worked on a production-push basis. To elaborate further,
under just-in-time manufacturing (colloquially referred to as JIT production
systems), actual orders dictate what should be manufactured, so that the exact
quantity is produced at the exact time that is required.
Just-in-time manufacturing goes hand in hand with concepts such as
Kanban, continuous improvement and total quality management (TQM). Just-intime production requires intricate planning in terms of procurement policies and
the manufacturing process if its implementation is to be a success. Highly
advanced technological support systems provide the necessary back-up that Justin-time manufacturing demands with production scheduling software and
electronic data interchange being the most sought after.
Conditions:
Management buy-in and support at all levels of the organization are required; if
a just-in-time manufacturing system is to be successfully adopted.
Adequate resources should be allocated, so as to obtain technologically
advanced software that is generally required if a just-in-time system is to be a
success.
Building a close, trusting relationship with reputed and time-tested suppliers

will minimize unexpected delays in the receipt of inventory.
Just-in-time manufacturing cannot be adopted overnight. It requires
commitment in terms of time and adjustments to corporate culture would be
required, as it is starkly different to traditional production processes.
The design flow process needs to be redesigned and layouts need to be reformatted, so as to incorporate just-in-time manufacturing.
Lot sizes need to be minimized.
Workstation capacity should be balanced whenever possible.
Preventive maintenance should be carried out, so as to minimize machine
breakdowns.
Set-up times should be reduced wherever possible.
Quality enhancement programs should be adopted, so that total quality control
practices can be adopted.
Reduction in lead times and frequent deliveries should be incorporated.
Motion waste should be minimized, so the incorporation of conveyor belts
might prove to be a good idea when implementing a just-in-time
manufacturing system.
Advantages
Just-in-time manufacturing keeps stock holding costs to a bare minimum. The
release of storage space results in better utilization of space and thereby bears a
favorable impact on the rent paid and on any insurance premiums that would
otherwise need to be made.
Just-in-time manufacturing eliminates waste, as out-of-date or expired
products; do not enter into this equation at all.
As under this technique, only essential stocks are obtained, less working
capital is required to finance procurement. Here, a minimum re-order level is
set, and only once that mark is reached, fresh stocks are ordered making this a
boon to inventory management too.
Due to the aforementioned low level of stocks held, the organizations return on
investment (referred to as ROI, in management parlance) would generally be
high.
As just-in-time production works on a demand-pull basis, all goods made
would be sold, and thus it incorporates changes in demand with surprising
ease. This makes it especially appealing today, where the market demand is
volatile and somewhat unpredictable.
Just-in-time manufacturing encourages the 'right first time' concept, so that
inspection costs and cost of rework is minimized.
High quality products and greater efficiency can be derived from following a
just-in-time production system.
Close relationships are fostered along the production chain under a just-in-time
manufacturing system.
Constant communication with the customer results in high customer
satisfaction.
Overproduction is eliminated when just-in-time manufacturing is adopted.
Disadvantages
Just-in-time manufacturing provides zero tolerance for mistakes, as it makes
re-working very difficult in practice, as inventory is kept to a bare minimum.
There is a high reliance on suppliers, whose performance is generally outside
the purview of the manufacturer.
Due to there being no buffers for delays, production downtime and line idling
can occur which would bear a detrimental effect on finances and on the
equilibrium of the production process.
The organization would not be able to meet an unexpected increase in orders
due to the fact that there are no excess finish goods.
Transaction costs would be relatively high as frequent transactions would be
made.
Just-in-time manufacturing may have certain detrimental effects on the
environment due to the frequent deliveries that would result in increased use of
transportation, which in turn would consume more fossil fuels.
The main objective of plant layout is to optimize the workflow of people as

well as product. Only through a good layout, the company can attain the following
objectives:
Providing comfort to the workers
Giving good and improved working condition by eliminating causes of
excessive noise, objectionable odor smoke, etc
Minimizing delays in production and making efficient use of the space that is
available
Easy supervision and better production control
Greater flexibility for changes in product design and for future expansion
Allow easy maintenance of machines and plants
There are several principles in order to get good plant layout. They are:
Integration. A good plant layout is able to integrate its workmen, materials,
machines in the best possible way
Minimum movement. A good layout is one that permits the minimum
movement between the operation
Uni-direction flow. A good layout is one that makes the materials move only in
the forward direction, toward stage of completion
Effective use of available space. Utilization of both horizontal and vertical
spaces and height is very important to use the space as much as possible
Maximum visibility. A good layout is one that makes men, machines, and
materials ready observable all the times
Maximum accessibility. All servicing and maintenance points should be
readily accessible. For example, equipment should not be placed against the
wall because necessary servicing or maintenance cannot be performed readily
Safety security. A good plant layout is the one which ensures proper security
Maximum flexibility. A good layout should be one that is adaptable or flexible
enough to take care of probable future changes in the volume of production, in
the range of products manufactured, and changes in the method/processes of

production
Time study is the method of measurement of laborers' work. In time study,

we determine the time for completing the work. There are many activities are
included in time study. For calculating time for doing work, we include the
average time of normal laborer. We also care of rest time and other spare time for
drinking water and refreshment.
Benefits of Time Study:
To develop an ideal time for each process.
To provide a base for incentive schemes.
To provide the best method for completing a particular job.
Increased productivity.
Provides a standard of performance to measure labor efficiency
It helps in exercising cost control through proper production control.
When standard time is taken management can be kept attention on causes of idle
time.
Like time study, motion study is also useful tool to increase the efficiency.
Here, we are defining it. You know that workers can do any work with many ways
or method. But to choose the best way out of alternatives is called motion study.
For this, cost accountant has to maintain the data of all the activities of workers.
With this study, productivity can be enlarged and inefficiency and wastage can be
diminished.
In motion study, we first of all, note the activities of laborers in work place.
With the help of stop watch equipment, spending time on per activity is noted.
After this, we have to take decision of activities which we have to stop. This study
or analysis determines prime method of doing any activity in factory. Sometime

software engineer can make the work design relating to workplace arrangement
and adjustable chair for workplace.
Benefits of Motion Study
1. It grows the ability of workers because apply of good methods, using of good
tools and stopping of unnecessary activities.
2. Life of machine can be increased.
3. It reduces exhaustion of workers.
4. It decreases labor cost due to less wastage in factory or plant.
a. Demand management - Demand management is the supply chain management

process that balances the customers requirements with the capabilities of the
supply chain. With the right process in place, management can match supply with
demand proactively and execute the plan with minimal disruptions. The process is
not limited to forecasting. It includes synchronizing supply and demand,
increasing flexibility, and reducing variability. In this paper, we describe the
demand management process in detail to show how it can be implemented within
a company and managed across firms in the supply chain.
b. Shop floor control - Shop floor control comprises the methods and systems
used to prioritize, track, and report against production orders and schedules. It
includes the procedures used to evaluate current resource status, labor, machine
usage, and other information required to support the overall planning, scheduling,
and costing systems related to shop floor operation. Shop floor control typically
calculates work in process based on a percentage of completion for each order and
operation that is useful in inventory valuations and materials planning.
d. MRP I & MRP II - Materials requirements planning and manufacturing resource

planning are interchangeable computer-driven systems for organizing and tracking
production processes. MRP schedules production and controls the flow of
inventory to match customers quantity orders and delivery targets. MRP II is
ideally an upgrade of MRP that comes with advanced functionalities for
optimizing production resources. MRP and MRP II are commonly used in
manufacturing and fabrication businesses.
MRP is manufacturing-centric: It focuses the scheduling and materials
control aspects of production to orders placed by customers. This limits its
capacity to base production on demand forecasts. This distinguishes it from MRP
II, which tracks additional aspects of production, such as personnel requirements,
financial estimates, demand forecasts and business planning. MRP II is actually
more integrative and strategically oriented than MRP, considering that it goes
beyond the short term to weigh the medium-term and long-term impacts of all
production resources.
e. Master Production & Scheduling - A Master Production Schedule is a Schedule
of the completions of the end items and these completions are very much planned
in nature. Master production schedule acts as a very distinct and important linkage
between the planning processes. With the help of this schedule, one can know the
requirements for the individual end items by date and quantity. In companies, MPS
are generally produced in order to know the number of each product that is to be
made over some planning horizon. This schedule forms a very unique part of the
companys sales program which deals with the planned response to the demands of
the market.
A master production schedule is also in management language referred to as the
master of all the schedules as this schedule provides the production, planning,
purchasing & top management, the most needed information required for planning
and control of the whole manufacturing process or the operation.
Master production scheduling plays an important role in the balancing of demand
with the supply i.e. satisfying customers according to the limits of the factory and
the suppliers base. MPS is used to know the number of the items that are to be
produced, the planned inventories of raw materials, finished products and parts
etc. MPS tells the company what is to be made or produced and also refers to the
time in which this production of the products is to be completed. It must be kept in
mind that MPS does not act as a sales forecast or as a manufacturing schedule or a
wish list or a final assembly schedule. MPS can be linked only with the final
products and not with the planning involving the production of parts or the
components, as these listings require very detailed planning so these are left to
the other plans that will follow this schedule.
f. Production planning and aggregate planning - Production planning is the
means by which we prepare our production quantities for the medium term
(generally one year). Aggregate planning refers to the fact that the production
planning is usually carried out across product lines. The main difficulty is that
demands vary from month to month. We want to keep production as stable as
possible yet maintain no inventory and experience no shortages. We must balance
the costs of production, overtime, subcontracting, inventory, shortages and
changes in production levels. In some case aggregate planning problems might
require the use of the transportation or linear programming modules.
g. Just in- time ( ToyotaKanban System) - "Just-in-Time" means making "only
what is needed, when it is needed, and in the amount needed." For example, to
efficiently produce a large number of automobiles, which can consist of around
30,000 parts, it is necessary to create a detailed production plan that includes parts
procurement. Supplying "what is needed, when it is needed, and in the amount

needed" according to this production plan can eliminate waste, inconsistencies,
and unreasonable requirements, resulting in improved productivity.
In the TPS (Toyota Production System), a unique production control
method called the "kanban system" plays an integral role. The kanban system has
also been called the "Supermarket method" because the idea behind it was
borrowed from supermarkets. Such mass merchandizing stores use product control
cards upon which product-related information, such as a product's name, code and
storage location, are entered. Because Toyota employed kanban signs for use in
their production processes, the method came to be called the "kanban system." At
Toyota, when a process refers to a preceding process to retrieve parts, it uses a
kanban to communicate which parts have been used.
Nur-Ayra A. Pebanco, MBA Candidate
Some small Facility layout and design is an important component of a

business's overall operations, both in terms of maximizing the effectiveness of the
production process and meeting the needs of employees. The basic objective of
layout is to ensure a smooth flow of work, material, and information through a
system. The basic meaning of facility is the space in which a business's activities
take place. The layout and design of that space impact greatly how the work is
donethe flow of work, materials, and information through the system. The key
to good facility layout and design is the integration of the needs of people
(personnel and customers), materials (raw, finishes, and in process), and
machinery in such a way that they create a single, well-functioning system.
Ease of future expansion or changeFacilities should be designed so that
they can be easily expanded or adjusted to meet changing production needs.
"Although redesigning a facility is a major, expensive undertaking not to be done
lightly, there is always the possibility that a redesign will be necessary," said Weiss
and Gershon in their book Production and Operations Management. "Therefore,
any design should be flexible'. Flexible manufacturing systems most often are
highly automated facilities having intermediate-volume production of a variety of
products. Their goal is to minimize changeover or setup times for producing the
different products while still achieving close to assembly line (single-product)
production rates."
Flow of movementThe facility design should reflect a recognition of the
importance of smooth process flow. In the case of factory facilities, the editors of
How to Run a Small Business state that "ideally, the plan will show the raw
materials entering your plant at one end and the finished product emerging at the
other. The flow need not be a straight line. Parallel flows, U-shaped patterns, or
even a zig-zag that ends up with the finished product back at the shipping and
receiving bays can be functional. However, backtracking is to be avoided in
whatever pattern is chosen. When parts and materials move against or across the
overall flow, personnel and paperwork become confused, parts become lost, and
the attainment of coordination becomes complicated."
Aim of production function is to add value to product or service which will

create a strong and long lasting customer relationship or association. And this can
be achieved by healthy and productive association between Marketing and
Production people. Marketing function people are frontline representative of the
company and provide insights to real product needs of customers.
An effective planning and control on production parameters to achieve or
create value for customers is called production management.
Production management refers to the application of management principles
to the production function in a factory. In other words, production management
involves application of planning ,organising , directing and controlling to the
production process .
The application of the management to the field of the production has been
the result of at least three development. First is the development of factory system
of production. until the emergence of the concept of the manufacturing , there was
no such things as management as we know it .it is true that people operated
business of one type or another , but for the most part , these people were owners
of business and did not regard themselves as manager as well.
The very essence of any business is to cater needs of customer by providing
services and goods, and in process create value for customers and solve their
problems. Production and operations management talks about applying business

organization and management concepts in creation of goods and services.
Production and operations management concern with the conversion of
inputs into outputs, using physical resources, so as to provide the desired utilities
to the customer while meeting the other organizational objectives of effectiveness,
efficiency and adoptability. It distinguishes itself from other functions such as
personnel, marketing, finance, etc., by its primary concern for 'conversion by using
physical resources.
These firms that are adopting the just-in-time inventory system established
these kind of program that prevents over-stockings. In a production firm that do
production every hour and every day during weekdays, quick and fast inventory
almost every day is important to avoid over stockings. This will enable them to
continuously deliveries of the goods or finish products to conduct further
inventory of their stocks. Over Production is one issue in the absence of just-intime inventory, this kind of inventory will thoroughly find quick relief on
problems in re-stocking. Deliveries will be monitored well in applying this kind
of process.
Minutes are important for the production firm, every manpower is needed,
it should not be wasted if over production is on-going. This kind of system will
make the company more systemic in their production and will be successful for
future issues. Inventory system has been a regular help since institutions exist in
the world.
From the past manual inventory system is done by these manufacturing

company, whereas over production is observed and technically rushed production
is adopted if bulk order is placed.
As time goes by, people increase their
knowledge in a very fast and easy system in inventory. Manual inventories have
been set by hundreds and thousands in count, after manual inventories, automated
inventory system has been discovered. From this the easiest way for the inventory
system is thru computers.
Manual counting has always been a culture, with estimated production
numbers to stocks holding. The adaptation of just in time inventory has helped
many manufacturing company especially the ones that produces food for fast and
accurate inventory of their productions and stocks.
reduces production cost and increases sales.
Just in time inventories
Inventories further helps the
accounting department on their estimation of sales and expenses.

When manufacturing firm minimize stocks holding, production also
reduces, with this the company shall reduces expenses in production, manpower
and in equipment.
Not just the materials expenses but also the utilities.
Minimizing production also means minimizing electricity and water bills and
salaries of workers for overtime.
Reduction of production will not affect the companys standing, it will be
rewarded by increase in sales and decrease in expenses. Adopting the just-in-time
inventory system analyze the needs of the company whether they need more
production to supply the needs for re-stockings or to minimize production after the
inventory is fit or is just right.
Features of a company is very important, it is required to give justice for

consumers to seek their service or to buy their products. Small-scale industry is a
very important part of the business industry. They allowed entrepreneur to push
business on their own and to contribute to the country and to the business industry.
First thing comes first a view of the business main product or service, and
because they have limited number of resources that starts with the entrepreneurs
own technical expertise which they probably trained during their earlier stages of
paid employment.
Small industry usually needs a strong infrastructural base, although this
need may vary according to the size and nature of industry. the smaller the unit
and the less formal is its frame, the less the need for this infrastructure.
Impact on employee morale and job satisfactionSince countless studies
have indicated that employee morale has a major impact on productivity, Weiss
and Gershon counsel owners and managers to heed this factor when pondering
facility design alternatives: "Some ways layout design can increase morale are
obvious, such as providing for light-colored walls, windows, space. Other ways
are less obvious and not directly related to the production process. Some examples
are including a cafeteria or even a gymnasium in the facility design. Again,
though, there are costs to be traded off. That is, does the increase in morale due to
a cafeteria increase productivity to the extent that the increased productivity covers
the cost of building and staffing the cafeteria."
Layout requirements can also differ dramatically by industry. The needs of
service-oriented businesses, for instance, are often predicated on whether
customers receive their services at the physical location of the business (such as at
a bank or pet grooming shop, for instance) or whether the business goes to the
customer's home or place of business to provide the service (as with exterminators,
home repair businesses, plumbing services, etc.) In the latter instances, these
businesses will likely have facility layouts that emphasize storage space for
equipment, chemicals, and paperwork rather than spacious customer waiting areas.
Manufacturers may also have significantly different facility layouts, depending on
the unique needs that they have. After all, the production challenges associated
with producing jars of varnish or mountaineering equipment are apt to be
considerably different than those of making truck chassis or foam beach toys.
Retail outlets comprise yet another business sector that has unique facility layout
needs. Such establishments typically emphasize sales floor space, inventory
logistics, foot-traffic issues, and overall store attractiveness when studying facility
layout issues.
Luningning Mercado, MBA Candidate

Just-in-time (JIT) inventory refers to an inventory management system
with objectives of having inventory readily available to meet demand, but not to a point
of excess where you must stockpile extra products. Maintaining inventory takes time and
has costs, which is what motivates companies to implement JIT programs.
Under ideal conditions a company operating at JIT manufacturing system
would purchase only enough materials each day to meet that day needs. Moreover,
the company would have no goods still in process at the end of the day, and all goods
completed during the day would have been shipped immediately to customers. As this
sequence suggests, "just-in-time" means that raw materials are received just in time to go
into production, manufacturing parts are completed just in time to be assembled into
products, and products are completed just in time to be shipped to customers.
Although few companies have been able to reach this ideal, many companies have
been able to reduce inventories only to a fraction of their previous level. The result has
been a substantial reduction in ordering and warehousing costs, and much more efficient
and effective operations. In a just in time environment, the flow of goods is controlled by
a pull approach. The pull approach can be explained as follows. At the final assembly
stage a signal is sent to the preceding work station as to the exact amount of parts and
materials that would be needed over the next few hours to assemble products to fill
customer orders, and only that amount of materials and parts is provided. The same signal
is sent back to each preceding workstation so a smooth flow of parts and materials is
maintained with no appreciable inventory buildup at any point. Thus all workstations
respond to the pull exerted by the final assembly stage, which in turn respond to customer
orders. As one worker explained, "Under just in time system you don't produce anything,
anywhere, for anybody unless they ask for it somewhere downstream. Inventories are evil
that we are taught to avoid".
The pull approach described above can be contrasted to the push approach used in
conventional manufacturing system. In conventional system, when a workstation
completes its work, the partially completed goods are pushed forward to the next work
station regardless of whether that workstation is ready to receive them. The result is an
unintentional stockpiling of partially completed goods that may not be completed for
days or even weeks. This ties up funds and also results in operating inefficiencies. For
one thing, it becomes very difficult to keep track of where everything is when so much is
scattered all over the factory floor.
Another characteristics of conventional manufacturing system is an emphasize on
"keeping every one busy" as an end on itself. This inevitably leads to excess inventories
particularly work in process inventories. In Just in time manufacturing, the traditional
emphasize of keeping everyone busy is abandoned in favor of producing only what
customers actually want. Even if that means some workers are idle.
When looking at the value of the product or service, the goal is to have the value
of the end-product or service exceed the cost of producing the product or providing the
service. The cost of the product or service includes all resources used to produce it (e.g.,
raw materials, labor, storage, transportation, and overhead costs).
We need to examine each activity within the process and determine the valueadded assessment of the activity. The value added by an activity, in an accounting sense,
is simply:
(Value of the product after the activity) minus (Value of the product prior to the
activity).
The value added by an activity should be a positive value. Ideally, the value
added by the activity is equal to or greater than the costs incurred during the activity.
Value from the customer's point of view is independent of the cost to produce the
product or provide the service. It is based on the customer's expectations, as identified by
the effectiveness indicators for the process.
How to Assess Value:
When looking at activities in a process, we must determine if the activity is
effective and efficient. We must also determine if the activity can be improved to provide
a better product or service for the customer. Refer to the effectiveness indicators selected
for the process to determine how the activity rates on the effectiveness indicator scale.
Look at the efficiency indicators of the activity. Wide variances in the efficiency (cost or
times) of the activity can indicate problems in the activity. Analyze the cost and times
collected for the activity to determine the value added by the activity versus the cost of
the activity.

Though the nuances of appropriate technology vary between fields and
applications, it is generally recognized as encompassing technological choice and
application that is small-scale industry, decentralized, labor-intensive, energy-efficient,
environmentally sound, and locally controlled.
engineering.
If the broader topic of product development "blends the perspective of marketing, design,
and manufacturing into a single approach to product development," then design is the act
of taking the marketing information and creating the design of the product to be
manufactured. Systems design is therefore the process of defining and developing
systems to satisfy specified requirements of the user.
Describe the aspects:

analysis.
Logical design
Physical design
Process Design
with how the data is represented and stored within the system. Finally, Process Design is
concerned with how data moves through the system, and with how and where it is
validated, secured and/or transformed as it flows into, through and out of the system. At
the end of the systems design phase, documentation describing the three sub-tasks is
produced and made available for use in the next phase.
Jerome G. Sison, MBA Candidate

engineering. If the broader topic of product development "blends the perspective of
marketing,
design,
and
manufacturing
into
single
approach
to
product
development,"[3] then design is the act of taking the marketing information and creating
the design of the product to be manufactured. Systems design is therefore the process of
defining and developing systems to satisfy specified requirements of the user.
`
Until the 1990s systems design had a crucial and respected role in the data
processing industry. In the 1990s standardization of hardware and software resulted in the
ability to build modular systems. The increasing importance of software running on
generic platforms has enhanced the discipline of software engineering. Object-oriented
analysis and design methods are becoming the most widely used methods for computer
systems design. The UML has become the standard language in object-oriented analysis
and design. It is widely used for modeling software systems and is increasingly used for
high designing non-software systems and organizations.
analysis.
Logical design
flows, inputs and outputs of the system. This is often conducted via modelling, using an
Physical design
1.
Input requirement,
2.
Output requirements,
3.
Storage requirements,
4.
Processing Requirements,
5.
System control and backup or recovery.

1.
User Interface Design
2.
Data Design
3.
Process Design
User Interface Design is concerned with how users add information to the
system and with how the system presents information back to them. Data Design
is concerned with how the data is represented and stored within the system.
Finally, Process Design is concerned with how data moves through the system,
and with how and where it is validated, secured and/or transformed as it flows
into, through and out of the system. At the end of the systems design phase,
documentation describing the three sub-tasks is produced and made available for
use in the next phase.
Physical design, in this context, does not refer to the tangible physical
design of an information system. To use an analogy, a personal computer's
physical design involves input via a keyboard, processing within the CPU, and
output via a monitor, printer, etc. It would not concern the actual layout of the
tangible hardware, which for a PC would be a monitor, CPU, motherboard, hard
drive, modems, video/graphics cards, USB slots, etc. It involves a detailed design
of a user and a product database structure processor and a control processor. The
H/S personal specification is developed for the proposed system.

Product design as a verb is the process of creating a new product to be sold by a
business to its customers. A very broad concept, it is essentially the efficient and effective
generation and development of ideas through a process that leads to new products
Due to the absence of a consensually accepted definition that reflects the breadth
of the topic sufficiently, two discrete, yet interdependent, definitions are needed: one that
explicitly defines product design in reference to the artifact, the other that defines the
product design process in relation to this artifact.
Product design as a noun: the set of properties of an artifact, consisting of the discrete
properties of the form (i.e., the aesthetics of the tangible good and/or service) and the
function (i.e., its capabilities) together with the holistic properties of the integrated form
and function.
Product design process: the set of strategic and tactical activities, from idea
generation to commercialization, used to create a product design. In a systematic
approach, product designers conceptualize and evaluate ideas, turning them into tangible
inventions and products. The product designer's role is to combine art, science, and
technology to create new products that people can use. Their evolving role has been
facilitated by digital tools that now allow designers to communicate, visualize, analyze
and actually produce tangible ideas in a way that would have taken greater manpower in
the past.
Product design is sometimes confused with (and certainly overlaps

with) industrial design, and has recently become a broad term inclusive of service,
software, and physical product design. Industrial design is concerned with bringing
artistic form and usability, usually associated with craft design and ergonomics, together
in order to mass-produce goods. Other aspects of product design include engineering
design, particularly when matters of functionality or utility (e.g. problem-solving) are at
issue, though such boundaries are not always clear.
There are various product design processes and many focus on different aspects.
The process shown below, for example, is "The Seven Universal Stages of Creative
Problem-Solving," outlined by Don Koberg and Jim Bagnell. It helps designers formulate
their product from ideas. This process is usually completed by a group of people, i.e.
industrial designers, field experts (e.g. prospective users), engineers, etc. depending upon
the products involved. The process focuses on figuring out what is required,
brainstorming possible ideas, creating mock prototypes, and then generating the product.
However, that is not the end of the process. At this point, product designers would still
need to execute the idea, making it into an actual product and then evaluate its success by
seeing if any improvements are necessary.
The product design process has experienced huge leaps in evolution over the last
few years with the rise and adoption of 3D printing. New consumer-friendly 3D printers
can produce dimensional objects and print upwards with a plastic like substance opposed
to traditional printers that spread ink across a page.
The design process follows a guideline involving three main sections:
Analysis
Concept
Synthesis
The latter two sections are often revisited, depending on how often the design
needs touch-ups, to improve or to better fit the criteria. This is a continuous loop, where
feedback is the main component. To break it down even more, the seven stages specify
how the process works. Analysis consists of two stages, concept is only one stage, and
synthesis encompasses the other four.
Analysis
Accept Situation: Here, the designers decide on committing to the project and
finding a solution to the problem. They pool their resources into figuring out how to solve
the task most efficiently.
Analyze: In this stage, everyone in the team begins research. They gather general and
specific materials which will help to figure out how their problem might be solved.
This can range from statistics, questionnaires, and articles, among many other
sources.
Concept
Define: This is where the key issue of the matter is defined. The conditions of the
problem become objectives, and restraints on the situation become the parameters within
which the new design must be constructed.
Synthesis
Ideate: The designers here brainstorm different ideas, solutions for their design
problem. The ideal brainstorming session does not involve any bias or judgment, but
instead builds on original ideas.
Select: By now, the designers have narrowed down their ideas to a select few, which
can be guaranteed successes and from there they can outline their plan to make the
product.
Implement: This is where the prototypes are built, the plan outlined in the previous
step is realized and the product starts to become an actual object.
Evaluate: In the last stage, the product is tested, and from there, improvements are
made. Although this is the last stage, it does not mean that the process is over. The
finished prototype may not work as well as hoped so new ideas need to be brainstormed.
Demand-pull innovation and invention-push innovation

Most product designs fall under one of two categories: demand-pull innovation or
invention-push innovation.
Demand-pull happens when there is an opportunity in the market to be explored
by the design of a product. This product design attempts to solve a design problem. The
design solution may be the development of a new product or developing a product that's
already on the market, such as developing an existing invention for another purpose.
Invention-push innovation happens when there is an advancement in intelligence.
This can occur through research or it can occur when the product designer comes up with
a new product design idea
Product design expression
Design expression comes from the combined effect of all elements in a product.
Colour tone, shape and size should direct a person's thoughts towards buying the product.
Therefore, it is in the product designer's best interest to consider the audiences who are
most likely to be the product's end consumers. Keeping in mind how consumers will
perceive the product during the design process will direct towards the products success
in the market. However, even within a specific audience, it is challenging to cater to each
possible personality within that group.
The solution to that is to create a product that, in its designed appearance and
function, expresses a personality or tells a story. Products that carry such attributes are
more likely to give off a stronger expression that will attract more consumers. On that
note it is important to keep in mind that design expression does not only concern the
appearance of a product, but also its function. For example, as humans our appearance as
well as our actions is subject to people's judgment when they are making a first
impression of us. People usually do not appreciate a rude person even if they are good
looking. Similarly, a product can have an attractive appearance but if its function does not
follow through it will most likely drop in regards to consumer interest. In this sense,
designers are like communicators, they use the language of different elements in the
product to express something.
Product design considerations
Product design is not an easy task. The stakeholders involved all demand
something different from the product designer and from the design process.
The manufacturer is concerned with production cost; in the end, the

manufacturer wants an economically produced product.
The purchaser looks at price, appearance, and prestige value.
The end user is concerned with usability and functionality of the final product.
The maintenance and repair department focuses on how well the final product
can be maintained: is the product easily reassembled, disassembled, diagnosed,
and serviced?
Stakeholders' needs vary from one another and it is the product designer's job to
incorporate those needs into their design.

Trends in product design
Product designers need to consider all of the details: the ways people use and
abuse objects, faulty products, errors made in the design process, and the desirable ways
in which people wish they could use objects. Many new designs will fail and many won't
even make it to market. Some designs eventually become obsolete. The design process
itself can be quite frustrating usually taking 5 or 6 tries to get the product design right. A
product that fails in the marketplace the first time may be re-introduced to the market 2
more times. If it continues to fail, the product is then considered to be dead because the
market believes it to be a failure. Most new products fail, even if it's a great idea. All
types of product design are clearly linked to the economic health of manufacturing
sectors. Innovation provides much of the competitive impetus for the development of
new products, with new technology often requiring a new design interpretation. It only
takes one manufacturer to create a new product paradigm to force the rest of the industry
to catch up - fueling further innovation. Products designed to benefit people of all ages
and abilitieswithout penalty to any groupaccommodate our swelling aging
population by extending independence and supporting the changing physical and sensory
needs we all encounter as we grow older.

Demand Management is a planning methodology used to forecast [predict], plan
for and manage the demand for products and services. This can be at macro levels as in
economics and at micro levels in public service organizations both governmental and
NGO, industries including energy. Demand Management has a very defined set of
processes, capabilities and recommended behaviors for companies that produce all
manner of goods and services. Consumer electronics and goods companies often lead in
the application of demand management practices to their demand chains; demand
management outcomes are a reflection of policies and programs to influence demand as
well as competition and options available to users and consumers. Effective demand
management follows the concept of a "closed loop" where feedback from the results of
the demand plans is fed back into the planning process to improve the predictability of
outcomes. Many practices reflect elements of the theory of Systems Dynamics.
Increasingly volatility is being recognized as significant an issue as the focus on variance
of demand to plans and forecasts.
Demand Management in Economics
In macroeconomics, demand
management is
the
art
or
science
of
controlling aggregate demand to avoid a recession. Demand Management at the

macroeconomic level involves the use of discretionary policy and is inspired
by Keynesian economics, though today elements of it are part of the economic
mainstream. The underlying idea is for the government to use tools like interest
rates, taxation, and public expenditure to change key economic decisions like
consumption, investment, the balance of trade, and public sector borrowing resulting in
an 'evening out' of the business cycle. Demand management was widely adopted in the
1950s to 1970s, and was for a time successful. However, it did not prevent the stagflation
of the 1970s, which is considered to have been precipitated by the supply shock caused
by the 1973 oil crisis.
Theoretical criticisms of demand management are that it relies on a longrun Phillips Curve for which there is no evidence, and that it produces dynamic
inconsistency and can therefore be non-credible. Today, most governments relatively
limit interventions in demand management to tackling short-term crises, and rely on
policies like independent central banks and fiscal policy rules to prevent long-run
economic disruption.
Natural resources and environment

In natural resources management and environmental policy more generally,
demand management refers to policies to control consumer demand for environmentally
sensitive or harmful goods such as water and energy. Within manufacturing firms the
term is used to describe the activities of demand forecasting, planning, and order
fulfillment. In the environmental context demand management is increasingly taken
seriously to reduce the economy's throughput of scarce resources for which market
pricing does not reflect true costs. Examples include metering of municipal water, and
carbon taxes on gasoline.
Welfare economics
Demand Management in economics focuses on the optimal allocation resources to

affect social welfare.
Welfare economics uses the perspective and techniques of microeconomics, but
they can be aggregated to make macroeconomic conclusions. Because different "optimal"
states may exist in an economy in terms of the allocation of resources, welfare economics
seeks the state that will create the highest overall level of social welfare.
Some people object to the idea of wealth redistribution because it flies in the face
of pure capitalist ideals, but economists suggest that greater states of overall social good
might be achieved by redistributing incomes in the economy. Because welfare economics
follows the techniques of microeconomics, where demand planning is part of the process
especially the redistribution of the funds through government taxes, fees and royalties to
programs for societal good, such as roads, services, income support and agriculture
support programs.
5.4 Demand management and forecasting

Demand management and forecasting is recognizing all demand for goods and
services to support the marketplace. Demand is prioritized when supply is lacking. Proper
demand management facilitates the planning and use of resources for positive and
profitable results and may involve marketing programs designed to increase or reduce
demand in a relatively short time.
5.4.1 Planning horizon

The planning horizon is how far a plan extends into the future and is dictated by
tactical and strategic degrees of uncertainty. The tactical horizon may be based on the
cumulative lead time needed to procure or produce low-level components. The strategic
horizon is based on the time needed to adjust capacity. A greater degree of uncertainty
requires a longer planning horizon.
Demand Management is both a stand alone process and one that is integrated into
Sales and Operations Planning (S&OP) or Integrated Business Planning (IBP). The
definition of the process and components covered in this section describe the current best
practices encompassing the methods and competencies that have a track record of success
with leading companies today. Much effort is put into more esoteric financial or academic
approaches; however their practical value is limited by the ability of business
practitioners to use on a regular basis. As those methods become more accessible and part
of regular use they join the best practices, "predictive forecasting" covered in this section
is a great example. Demand Management in its most effective form has a broad definition
well beyond just developing a "forecast" based on history supplemented by "market" or
customer intelligence, and often left to the supply chain organization to interpret. Philip
Kotler, a noted expert and professor of marketing management notes two key points: 1.
Demand management is the responsibility of the marketing organization (in his definition
sales is subset of marketing); 2. The demand "forecast" is the result of planned marketing
efforts. Those planned efforts, not only should focus on stimulating demand, more
importantly influencing demand so that a company's [business'] objectives are achieved.
George Palmatier a noted expert on the practical approach to demand management calls
this "Marketing with a Big M".
The components of effective demand management, identified by George
Palmatier and Colleen Crum, are: 1. Planning Demand; 2. Communicating Demand; 3.
Influencing Demand and 4. Prioritizing Demand.
Understanding the elements of Demand Management
1. Planning Demand: Which involves a full multiple-view process or work flow;
including statistical forecast as a baseline from clean "demand history" [not shipments],
using the most effective statistical models. Kai Trepte, developed the excel add-in
"Forecast X" to provide practitioners with a workstation capability to assess the best
matches between data and forecast models. Increasingly "predictive forecasts" have
moved from a limited use to becoming best practice for more companies. Predictive
forecasts use simulation of potential future outcomes and their probabilities rather than
history to form the basis for long range (5-10+ years) demand plans. Baseline forecasts
are typically developed by demand planners and analysts, who may be regional or
centrally located. They work under the guidance of the Demand Manager. Baseline
forecasts are communicated to members of the demand management team. This usually
includes: regional sales leaders, market managers, and product managers. The team may
include customer service leads who manager orders under service agreements with
customers and have direct insight into customer demand. For major retailers this is often
Point of Sale data provided to suppliers.
Demand management in IT
IT / IS demand managers seek to understand in advance how to best meet the
needs and expectations of customers, clients, partners, and enablers. Thus, proper forecast
and sizing of demand is required in order to deliver a stable and effective technology
environment.
1.1 System Integration

The Shop Floor Control system integrates with other JD Edwards World systems
to take advantage of single entries, information sharing, and data consistency across
systems.
Figure 1-1 Shop Floor Control System
Description of "Figure 1-1 Shop Floor Control System"
The Product Data Management system provides information about bills of material,
work centers, and routings.
The Inventory Management system allows you to track materials between inventory
or storage locations and the shop floor. You can perform inventory issues, commitments,
and completions, and track order quantities throughout the production
process.
The Sales Order Management system allows you to generate work orders when you
enter a sales order and updates sales information from within the Shop Floor Control
system.
The Capacity Requirements Planning system reads the routings for work orders and
rate schedules and monitors the load on the work centers involved. This allows you to
effectively manage the loads on your work centers to maximize production and meet
scheduled demand.
The Payroll system interface allows single entry of employees' hours. You can record
hours and quantities per work request or per employee to accommodate both piecerate and hourly rate employees.
The Procurement system allows you to automatically generate purchase orders for
subcontracted operations on your routings.
The Distribution Requirements Planning, Master Production Scheduling, and Material

Requirements Planning systems provide suggested purchase and manufacturing
orders
required to maintain a valid production schedule.
The Warehouse Management system allows you to originate picking requests through
Manufacturing systems, which further enhances the automated method of tracking
inventory movement within a warehouse.
1.2 Features
The following graphic illustrates the features available to you in the Shop Floor
Control system. These features are described in detail following this graphic.
Figure 1-2 Shop Floor Control System Features
Description of "Figure 1-2 Shop Floor Control System Features"

Hours and Quantities Tracking
Enter and track time and quantities completed and scrapped by work order and by
employee
Allocate and track resource usage by work center per calendar month
Review and analyze reports of work orders with detail by operation of standard
versus
actual for:
Setup, labor, and machine time
Quantity complete and scrapped
Charge actual hours and quantities to a work order as each manufacturing step is
completed
Process or Routing Instructions
Generate a routing automatically when a work order is processed
Use master routings or non-standard routings for items and indicate when to use each
item
Change the work centers and procedures for each operation on the routing
Modify the sequence and status of each operation on the routing
Make real-time modifications to routing instructions
Display quantity ordered, completed, and scrapped for each operation

Work Order and Rate Creation
Enter work orders and rates manually
Create work orders and rates automatically from Material Requirements Planning (MRP)
by answering action messages, or from sales order entry and select kits for
assemble-to-
order environments
Generate shop floor paperwork automatically, including standard parts lists and
routing
instructions
Differentiate work orders and rates by type, priority, and status
Group work orders by a parent number (a useful feature for job numbers that contain
many work order numbers)
Automatically generate purchase orders for sub-contracted operations on the routing

for work orders and rates
Blending, Filling, and Packaging
Produce and track work orders for the filling and packaging of lube oil finished goods
when:
Blending products requires more than one co- or by-product
Blending and filling on the same work order
A flushing step is required that produces a by-product
Using Super Backflush to complete products in separate steps

Production Scheduling and Tracking
Schedule work center production for rate schedules, work orders, or both
Track and compare planned production schedules against actual schedules
Use the online scheduling workbench to review, dispatch, and update production
scheduling information in real-time
Calculate start and complete dates for each work order by operation from the Shop
Floor Control Routing Instructions table (F3112)
Maintain the rate schedule after using rate based MRP

Manufacturing Accounting
Plan and track costs for setup, labor, material, and overhead
Compare planned costs against actual costs and calculate a variance amount
Use feature cost percent for co-/by-product costing
Create journal entries to charge actual and variance costs to a work order or rate
schedule in the general ledger
Material Tracking
Create a parts list automatically when you process a work order
Display the quantity on order, on hand, and available for each part
Access detailed information about supply and demand quantities
Check the availability of the components required to manufacture a parent item and
generate a shortage list
Issue the parts to a work order using a manual, preflush, or backflush method
Backflush both quantities of components issued to a work order and the labor
expended with pay point operations
Enter and track completions to inventory when parent items are completed
Attach the parts list and routing instructions to the work order and print shop floor
paperwork
Track where lots are used, and split and trace where lots come from with advanced lot
control
Maintain and monitor work orders created from the Configuration Management
system
for configured items
Process work orders that produce co-products or by-products and process the
necessary transactions
Generate an inventory shortage list by work order and item
Enter issue transactions for inventory items associated with a work order
Generate a picking request in the Warehouse Management system to select a location

and move the inventory (this occurs after the Manufacturing system creates a parts
list without a work center attached, and checks availability)
Reporting
Run reports that compare actual values with planned values and indicate the variance
between the two
Run shortage reports by item or work order to identify potential manufacturing

constraints due to a lack of availability of required components
Print shop floor paperwork, such as work orders, parts lists, and routings for items
Review daily shop work lists to monitor job status, identify queue problems at work
centers, and flag other areas, such as engineering changes or lost material
1.3 Process Flow
The following graphic illustrates all of the processes involved in the Shop Floor
Control system. The arrows show the flow from process to process, beginning with a
work order and ending with an inventory completion.
Figure 1-3 Shop Floor Control System Processes
Description
of
"Figure
1-3
Shop
Floor
Control
System
Processes"
1.4 Tables for Shop Floor Control

The following is a list of the tables used throughout the Shop Floor Control system:
Table
Description
Business Unit Master
Identifies branch, plant, warehouse, and business unit
(F0006)
(entity) information, such as company, description

(name), and category codes assigned to that entity.
Generic Message/Rate
Contains codes that correspond to a text message. In the
(F00191)
Shop Floor Control system, this is used for routing text on

a work order.
Account Master
(F0901)
Maintains the account data for the general ledger.
Table
Description
Account Ledger
Stores the transaction records for the general ledger.
(F0911)
Work Center Master
Contains detail data about all defined work centers.
(F30006)
Bill of Materials
Defines
and
maintains
warehouse
(plant
level)
Master (F3002)
information about bills of materials, such as quantities of

components, as well as features, options, and levels of
detail for each bill.
Item Cost Component
Contains frozen standard costs for journal entry creation
Add-Ons (F30026)
for work orders.
Routing Master
Stores
(F3003)
sequences, and work centers, as well as run, setup, and
routing
information,
including
operation
machine time.
Job Shop
Contains general branch/plant information.
Manufacturing
Constants (F3009)
Kanban Master
Contains the set of kanban cards associated with an item.
(F3016)
Each kanban defines the supplying location, consuming

location, quantity, and unit of measure. The system uses
next numbers to control the kanban identification number.
If the system pulls the item from an external source, the
supplier's number is included.
Work Order Variance
Stores the work order variance that shows the difference
(F3102)
in costs from when the standards were set at the beginning

of the accounting period.
Work Order Serial
Contains the fields that identify work order assemblies
Numbers (F3105)
with lot serial numbers.
Table
Description
Item/Line Relationship
Stores the relationships between items and production
Master (F3109)
lines. The system uses one of the records as the default

rate generation rule.
Schedule Quantity
Contains the daily quantities making up a work order or a
Detail (F31091)
rate. The system uses this file for scheduling and

sequencing production lines and work centers.
Shop Floor Control
Contains the components used on a work order.
Parts List (F3111)

Shop Floor Control
Contains the specific instructions for manufacturing work
Routing Instructions
orders.
(F3112)
Work Order Time
Stores the labor transactions reported on a work order.
Transactions (F31122)
Shortage Maintenance
Contains component shortages for work orders.
Master (F3118)
MPS/MRP/DRP
Contains the source of gross requirements that are posted
Message (F3411)
to items from parent items.
Forecast (F3460)
Contains the forecast data that Resource Requirements

Planning (RRP) validates. It is then used as input to
MPS/MRP/DRP.
Inventory Constants
Used to control day-to-day transactions that occur within
(F41001)
the Inventory Management system. Directs the nature of

certain
integrated
operations
between
Inventory
Management and other systems, such as Sales Order

Management, Procurement, and General Accounting.
Item Master (F4101)
Stores basic information about each item defined for

inventory, such as description, search name, and units of
Table
Description
measure.
Item Branch (F4102)
Defines and maintains warehouse or plant level

information, such as costs, quantities, category codes, and
physical locations.
Item Location
Specifies all inventory locations for an item.
(F41021)
Item Cross Reference
Enables you to relate item numbers for a specific purpose.
(F4104)
Lot Master (F4108)
Defines the actual potency of a lot.
Item Ledger (F4111)
Stores the transaction history for all items.
Item History (F4115)
Stores usage data for items optional in some Shop Floor

Control system transaction programs.
Warehouse Requests
Stores putaway, picking, and replenishment movement
(F4600)
requests.
Warehouse Suggestions
Contains the warehouse requests after they have been
(F4611)
processed by putaway, picking, or replenishment.
Work Order Master
Stores the work order information, such as item numbers,
(F4801)
quantities, and dates.
Work Order
Contains text and instructions specific to work orders that
Instruction/Disposition
are identified by different record types.
(F4802)
3. MRP
manufacturing operations. MRP systems translate the master production schedule into
component- and raw material-level demand by splitting the top level assembly into the
individual parts and quantities called for on the bill of materials, which reports to that
assembly, and directs the purchasing group when to buy them based on the component
lead time which is loaded in the MRP system.
3.1 MRPII
and productivity.
4. Master Production Scheduling (or MPS as its often referred to) is a manufacturing
planning tool that is used to capture a number of variables from different elements of the
organization (customer demand, capacity, inventory levels, material flows, etc) and then
describe which parts the organization will manufacture and at what frequency. MPS is a
fairly standard tool within manufacturing companies its usually administered through the
operations/planning function and controlled by a team headed by a Master Production
Scheduler. Its typically administered through the MRP system. The MPS process stops
the business being led by the he who shouts loudest gets their parts syndrome and
delivers a manufacturing plan that not only targets meeting the needs of the customer but
also the broader capabilities of the manufacturing organization.
Five key benefits of Master Production Scheduling
1/ Can help to smooth the demand signal
Most customer demand signals will contain peaks and troughs of demand this
profile can result in planning problems and inefficiency for manufacturers. A significant
benefit of MPS is that since it decouples the customer demand from what is manufactured
batch sizes can be tuned to optimize the production process. Where demand is
particularly spiky (ie. Peeks and troughs of demand) this can be of enormous assistance
producing a steady drum beat of manufacture (taking advantage of batch sizes and
minimal setup times) which can then ripple through the supply chain.
2/ Protects lead time and helps book future deliveries
A common complaint for many organizations is that demand is loaded within lead
time i.e. if a part takes 100 days to manufacture its no good taking a customer demand
for delivery in 50 days where there is no stock you are struggling before youve even
started the manufacturing process. This can create panic amongst the staff throwing
existing priorities into disarray. Whilst there are a variety of methods that can be used to
stop this MPS can be a very effective method as it is the production schedule that drives
the manufacturing not the customer demand. This enables the organization to protect its
lead time but also assists planning in looking at when future customer requirement is best
supported by manufacturing output.
3/ Acts as a single communication tool to the business
A major benefit to any organization that adopts MPS is that it acts as a single
communication tool for the business regarding its manufacturing plans. The MPS
schedule is typically available via the MRP system however whatever the method its
imperative that its communicated in an easily understandable form that can be used
throughout the organization.
4/ Helps the Supply chain prioritize requirement
Having a fixed schedule enables the supply chain team in particular the
procurement function to communicate priorities and requirements effectively. One of the
key problems many manufacturing organizations face where they are led by changing
customer requirement is where the supply chain gets reprioritized depending on the
problem of the week. Its no surprise that suppliers work best to regular smoothed
demand where that demand in unstable it can often lead to missed deliveries (of what
was planned) let alone the detrimental affect to relationships with suppliers that struggle
to keep up with whats really required.
5/ Helps stabilize production

Master production schedules are best reviewed as part of a formal business
process which includes the relevant stakeholders and often requires senior sign off before
it is either loaded into the MRP system or is passed to production for action. Its common
the production schedule to be outputted from a formal SIOP review.
Typically master production schedules do not allow planning in arrears so where
failures have happened and product has not been manufactured as planned these items
are re-planned to a relevant point in the future.
Another common attribute of a master production schedule is that there is usually a fixed
planning window whereby plans do not get changed. For example the first 6 weeks of the
plan maybe termed fixed. This enables production to concentrate on whats ahead of them
without worrying about reprioritizations. Additions may be added to this fixed period but
usually such amendments are tightly controlled.
Whilst, as with any business process, there are challenges associated with
deploying a master production schedule there are some enormous and tangible benefits.
5. Production Planning
The administrative process that takes place within a manufacturing business and
which
involves making sure
necessary items are
that
procured
and
sufficient raw
ready
materials, staff and
other
to create finished products according
to
the schedule specified. A typical large manufacturing business engaging in production

planning will aim to maximize profitability while maintaining a satisfied consumer base.
Production planning is the planning of production and manufacturing processes in
a
company
or
industry.
It
utilizes
the resource
allocation of
activities
employees, materials and production capacity, in order to serve different customers.[1]
of
Different types of production methods, such as single item manufacturing, batch

production, mass production, continuous production etc. have their own type of
production planning. Production planning can be combined with production control into
production planning and control, or it can be combined and or integrated into enterprise
resource planning.
Production planning is used in companies in several different industries, including
agriculture, industry, amusement industry, etc.
5.1 Aggregate planning is an operational activity that does an aggregate plan for
the production process, in advance of 6 to 18 months, to give an idea to management as
to what quantity of materials and other resources are to be procured and when, so that the
total cost of operations of the organization is kept to the minimum over that period..
The quantity of outsourcing, subcontracting of items, overtime of labour, numbers to be
hired and fired in each period and the amount of inventory to be held in stock and to be
backlogged for each period are decided. All of these activities are done within the
framework of the company ethics, policies, and long term commitment to the society,
community and the country of operation.
Aggregate planning has certain pre required inputs which are inevitable. They
include:
Information about the resources and the facilities available.
Demand forecast for the period for which the planning has to be done.
Cost of various alternatives and resources. This includes cost of holding inventory,
ordering cost, cost of production through various production alternatives like
subcontracting, backordering and overtime.
Organizational policies regarding the usage of above alternatives.

"Aggregate Planning is concerned with matching supply and demand of output over
the medium time range, up to approximately 12 months into the future. The term
aggregate implies that the planning is done for a single overall measure of output or, at
the most, a few aggregated product categories. The aim of aggregate planning is to set
overall output levels in the near to medium future in the face of fluctuating or uncertain
demands. Aggregate planning might seek to influence demand as well as supply.
6. Just in Time (Toyota Kanban System)

Kanban ( ( )?) (literally signboard or billboard in Japanese) is a
scheduling system for lean and just-in-time (JIT) production. Kanban is a system to
control the logistical chain from a production point of view, and is an inventory control
system. Kanban was developed by Taiichi Ohno, an industrial engineer at Toyota, as a
system to improve and maintain a high level of production. Kanban is one method to
achieve JIT.
Kanban became an effective tool to support running a production system as a
whole, and an excellent way to promote improvement. Problem areas are highlighted by
reducing the number of kanban in circulation. One of the main benefits of kanban is to
establish an upper limit to the work in progressinventory, avoiding overloading of the
manufacturing system. Other systems with similar effect are for exampleCONWIP.[5] A
systematic study of various configurations of kanban systems, of which CONWIP is an
important special case, can be found in Tayur (1993), among other papers.
In the late 1940s, Toyota started studying supermarkets with the idea of applying
shelf-stocking techniques to the factory floor. In a supermarket, customers generally
retrieve what they need at the required timeno more, no less. Furthermore, the
supermarket stocks only what it expects to sell in a given time, and customers take only
what they need, since future supply is assured. This observation led Toyota to view a
process as being a customer of one or more preceding processes, and to view the
preceding processes as a kind of store. The "customer" process goes to the store to get
required components, which in turn causes the store to restock. Originally, as in
supermarkets, signboards guided "shopping" processes to specific shopping locations
within the store.
Kanban aligns inventory levels with actual consumption. A signal tells a supplier
to produce and deliver a new shipment when material is consumed. These signals are
tracked through the replenishment cycle, bringing visibility to the supplier, consumer, and
buyer.
Kanban uses the rate of demand to control the rate of production, passing demand
from the end customer up through the chain of customer-store processes. In 1953, Toyota
applied this logic in their main plant machine shop.
Toyota's Six Rules
Later process picks up the number of items indicated by the kanban at the earlier
process.
Earlier process produces items in the quantity and sequence indicated by the kanban.
No items are made or transported without a kanban.
Always attach a kanban to the goods.
Defective products are not sent on to the subsequent process. The result is 100% defect-
free goods.
Reducing the number of kanban increases the sensitivity.
Kanban cards
Kanban cards are a key component of kanban and they signal the need to move
materials within a production facility or to move materials from an outside supplier into
the production facility. The kanban card is, in effect, a message that signals depletion of
product, parts, or inventory. When received, the kanban triggers replenishment of that
product, part, or inventory. Consumption, therefore, drives demand for more production,
and the kanban card signals demand for more productso kanban cards help create a
demand-driven system.
It is widely held by proponents of lean production and manufacturing that
demand-driven systems lead to faster turnarounds in production and lower inventory
levels, helping companies implementing such systems be more competitive.
In the last few years, systems sending kanban signals electronically have become
more widespread. While this trend is leading to a reduction in the use of kanban cards in
aggregate, it is still common in modern lean production facilities to find use of kanban
cards. In Oracle ERP (enterprise resource planning) software, kanban is used for
signalling demand to suppliers through email notifications. When stock of a particular
component is depleted by the quantity assigned on kanban card, a "kanban trigger" is
created (which may be manual or automatic), a purchase order is released with predefined
quantity for the supplier defined on the card, and the supplier is expected to dispatch
material within a specified lead-time.
Kanban cards, in keeping with the principles of kanban, simply convey the need
for more materials. A red card lying in an empty parts cart conveys that more parts are
needed.
Three-bin system
An example of a simple kanban system implementation is a "three-bin system" for
the supplied parts, where there is no in-house manufacturing. One bin is on the factory
floor (the initial demand point), one bin is in the factory store (the inventory control
point), and one bin is at the supplier. The bins usually have a removable card containing
the product details and other relevant informationthe classic kanban card.
When the bin on the factory floor is empty (because the parts in it were used up in a
manufacturing process), the empty bin and its kanban card are returned to the factory
store (the inventory control point). The factory store replaces the empty bin on the factory
floor with the full bin from the factory store, which also contains a kanban card. The
factory store sends the empty bin with its kanban card to the supplier. The supplier's full
product bin, with its kanban card, is delivered to the factory store; the supplier keeps the
empty bin. This is the final step in the process. Thus, the process never runs out of
productand could be described as a closed loop, in that it provides the exact amount
required, with only one spare bin so there is never oversupply. This 'spare' bin allows for
uncertainties in supply, use, and transport in the inventory system. A good kanban system
calculates just enough kanban cards for each product. Most factories that use kanban use
the coloured board system (heijunka box).
Electronic kanban
Many manufacturers have implemented Electronic kanban (sometimes referred to
as E-kanban systems. These help to eliminate common problems such as manual entry
errors and lost cards. E-kanban systems can be integrated into enterprise resource
planning (ERP) systems, enabling real-time demand signaling across the supply chain
and improved visibility. Data pulled from e-kanban systems can be used to optimize
inventory levels by better tracking supplier lead and replenishment times.
E-kanban is a signaling system that uses a mix of technology to trigger the movement of
materials within a manufacturing or production facility. Electronic kanban differs from
traditional kanban in that it uses technology to replace traditional elements such as
kanban cards with barcodes and electronic messages.
A typical electronic kanban system marks inventory with barcodes, which workers scan
at various stages of the manufacturing process to signal usage. The scans relay messages
to internal/external stores to ensure restocking of products. Electronic kanban often uses
the internet as a method of routing messages to external suppliersand as a means to allow
a real time view of inventory, via a portal, throughout the supply chain.
Organizations such as the Ford Motor Companyand Bombardier Aerospace have used
electronic kanban systems to improve processes. Systems are now widespread from
single solutions or bolt on modules to ERP systems.
In a kanban system, adjacent upstream and downstream workstations

communicate with each other through their cards, where each container has a kanban
associated with it. The two most important types of kanbans are:
Production (P) Kanban: A P-kanban, when received, authorizes the workstation to

produce a fixed amount of products. The P-kanban is carried on the containers that
are associated with it.
Transportation (T) Kanban: A T-kanban authorizes the transportation of the full

container to the downstream workstation. The T-kanban is also carried on the
containers that are associated with the transportation to move through the loop again.
After deciding above the proper site for locating an industrial unit, next important
point to be considered by an entrepreneur is to decide about the appropriate layout for the
plant. Plant layout is primarily concerned with the internal set up of an enterprise in a
proper manner. It is concerned with the orderly and proper arrangement and use of
available resources viz., men, money, machines, materials and methods of production
inside the factory. A well designed plant layout is concerned with maximum and effective
utilisation of available resources at minimum operating costs.
The concept of plant layout is not static but dynamic one. It is on account of
continuous manufacturing and technological improvements taking place necessitating
quick and immediate changes in production processes and designs. A new layout may be
necessary because of technological changes in the products as well as simple change in
processes, machines, methods and materials. A new layout also becomes necessary when
the existing layout becomes ineffective and poor or is not conducive to the changed
circumstances. There are certain indications which raise alarm for immediate changes in
the existing layout of plant.
These indications may be in the form of excessive manufacturing time, improper

storage, lack of control over materials and employees, poor customer service, excessive
work in progress and work stoppages etc.
From these definitions it is clear that plant layout is arrangement and optimum
utilisation of available resources in such a manner so as to ensure maximum output with
minimum input.
Objectives of Plant layout:
A properly planned plant layout aims at achieving the following objectives:
1. To achieve economies in handling of raw materials, work in- progress and finished
goods.
2. To reduce the quantum of work-in-progress.
3. To have most effective and optimum utilisation of available floor space.
4. To minimise bottlenecks and obstacles in various production processes thereby
avoiding the accumulation of work at important points.
5. To introduce system of production control.
6. To ensure means of safety and provision of amenities to the workers.
7. To provide better quality products at lesser costs to the consumers.
8. To ensure loyalty of workers and improving their morale.
9. To minimise the possibility of accidents.
10. To provide for adequate storage and packing facilities.
11. To workout possibilities of future expansion of the plant.
12. To provide such a layout which permits meeting of competitive costs?
The objectives of plant layout have been nicely explained by Shubin and
Madeheim. Its objective is to combine labour with the physical properties of a plant
(machinery, plant services, and handling equipment) in such a manner that the greatest
output of high quality goods and services, manufactured at the lowest unit cost of
production and distribution, will result.
Plant layout is a mechanism which involves knowledge of the space requirements
for the facilities and also involves their proper arrangement so that continuous and steady
movement of the production cycle takes place.
Types of layouts
1. Process layout These layouts are also called the functional layouts and are very
suitable in the conditions, when the products being prepared are non standard or
involve wide variations in times of processing of the individual operations.
Such layouts are able to make better utilization of the equipment that is available, with
greater flexibility in allocation of work to the equipment and also to the workers.
Imbalance caused in one section is not allowed to affect the working of the other
sections.
2. Product layout These layouts are also known as the line layouts or the layout by
sequence. In such layouts, the manufacturing cycle is small with minimum material
handling. The space required is small and quality control is easy to exercise.
3. Project layout Such layouts are also referred to as the fixed position layouts. In
these layouts, the components, heavy materials, sub assemblies all remain fixed at one
place and the job is completed by movement of machines, men and tools to the
location of the operations.
Asiya S. Al-Hammoush, MBA Candidate

Production is considered as a process of adding value to the product because
customers/consumers checking/investigating where the product came from? Process/How
& When is the product made? And so on. This aspects is very important and its under the
production, important in a way that buyer will be loyal to the product if the production
process is all positive or in other words the customer/consumer wants the production
process of a product.
Example:
The production process of gardenia is the best because in their production of making
breads all are machine process no hand used except to their reject product (along the
process of production) this thing is addition of value to the final product.
After the very basic explanation about the question, I want to add more
information, all about value chain. It is the ultimate production process of an
organization. A value chain describes all of the activities that an organization undertakes
to produce a product. The manager of the company can add all of the costs of producing
the product, subtract those costs from the income received from the sale of the product,
and determine the profitability of the product line and these activities under the value
chain adds value to the final product. The same with Porters value chain is that there is a
sequence of activities, each of which adds incremental value.
A company established maintenance programs to overcome the problems which is
related to equipment breakdown and this reasons will benefits the company:
reduce the overall operating cost
boost the productivity of the plant
maintain the plant production
reduce defects
Some of the common maintenance strategies are as follows:
1. Breakdown Maintenance - This is one of the earliest maintenance program being
implemented in the industry. The approach to maintenance is totally reactive and only
act when the equipment needs to be fixed.
2. Preventive Maintenance - This is a time-based maintenance strategy where on a
predetermined periodic basis, equipment is taken off-line, opened up and inspected.
Based on visual inspection, repairs are made and the equipment is then put back online.
3. Predictive Maintenance - a more condition-based approach to maintenance. The
approach is based on measuring of the equipment condition in order to assess whether
an equipment will fail during some future period, and then taking action to avoid the
consequences of that failures.
4. Proactive Maintenance - Unlike the three type of maintenance strategies which has
been discussed earlier, proactive maintenance can be considered as an another new
approach to maintenance strategy. Dissimilar to preventive maintenance that based on
time intervals or predictive maintenance that based on condition monitoring,
proactive maintenance concentrate on the monitoring and correction of root causes to
equipment failures. The proactive maintenance strategy is also designed to extend the
useful age of the equipment to reach the wear-out stage by adaptation a high mastery
level of operating precision.

a. Demand management
It is focused on a fast and adequate integration of supplier needs in order to balance

and strategically align demand with operational capability in the supply chain. Lack
of accurate information is among some of the progressive demand alignment
problems in a supply chain, which leads to inefficient customer service, poor stock
rotation, and high obsolescence rate aggravated by the wide diversity of product.
Its function is recognizing all demands for goods and services to support the market
place. It involves prioritizing demand when supply is lacking. Proper demand
management facilitates the planning and use of resources for profitable business
results
b. Shop floor control
Shop floor control comprises the methods and systems used to prioritize, track, and report
against production orders and schedules. It includes the procedures used to evaluate
current resource status, labor, machine usage, and other information required to support
the overall planning, scheduling, and costing systems related to shop floor operation.
Shop floor control typically calculates work in process based on a percentage of
completion for each order and operation that is useful in inventory valuations and
materials planning.
Article
Shop floor control is responsible for the detailed management of activities and the flow of
materials inside the plant, including employees, materials, machines, and production
time. Shop floor control activity typically begins after planning (e.g., with MRP, ERP);
once planned, orders and purchase requisitions are created. Shop floor control attends to
the following functions (sequentially):
Planned orders
Conversion of planned orders to process/production
Production and process order scheduling
Capacity requirements planning
Material availability assessment
Release of production/process orders
Material withdrawals
Order confirmations
Goods receipt documentation
Order settlement
Shop floor control may also include identifying and assessing vulnerabilities and
risks due to the shop floor environment, employees, process, and the technologies
employed at the shop-floor level. Based on the assessment of these factors, shop floor
control initiates measures to keep risk at an acceptable minimum level.
Best practices for shop floor control include:
Efficiently execute, prioritize, and release work orders to the shop floor with real-time
status of progress and completion.
Deliver accurate and up-to-date information on materials consumption and

availability, which is essential for reliable inventory planning and costing.
Effectively execute change management processes to ensure that the proper revision
of products, bills of materials, and processes are always in place for production.
Automate shop floor equipment control and data collection to reduce human errors
and increase productivity.
Provide the correct manufacturing SOPs, technical drawings, and diagnostics to shop
floor operators to reinforce training and ensure proper processing.
Download setup programs directly to equipment based on product and process

specifications.
With fully interactive access to shop floor control software, supervisors can monitor
shop activities and make better decisions on the spot, especially using mobile computing
equipment.
In summary, shop floor control within a manufacturing execution system

(MES) can improve the productivity of any shop, regardless of its manufacturing style or
capacity. Assembling, cutting metal, or fabricating all require common functions; shop
floor control programs can adapt to the operation. When evaluating the need for shop
floor control, remember that the driving force is data. Properly executed, shop floor
control should deliver the right information at the right time to the right place without
fail. Consequently, shop floor efficiency and productivity rise appreciably.
c. MRP I & MRP II

MRP I stands for material requirements planning and deals with bringing in the
planning and tracking tools.
MRP I systems translate the master production schedule into component and raw
material level demand by splitting the top level assembly into the individual parts and
quantities called for on the bill of materials, which reports to that assembly, and directs
the purchasing group when to buy them based on the component lead time which is
loaded in the MRP system. MRP II goes several steps beyond MRP. While MRP stopped
at the receiving dock, MRPII incorporates the value stream all the way through the
manufacturing facility to the shipping dock where the product is packaged and sent to the
end customer. That value stream includes production planning, machine capacity
scheduling, demand forecasting and analysis modules, and quality tracking tools. MRPII
also has tools for tracking employee attendance, labor contribution and productivity.
d. Master Production & Scheduling
Master
Production
&Scheduling
is
comprehensive
product manufacturing schedule that covers what is to be assembled or made, when, with
what materials acquired when, and the cash required translated into a business plan.
Material requirements planning (MRP) has MPS as an essential component
Five key benefits of Master Production Scheduling
1. Can help to smooth the demand signal - Most customer demand signals will contain
peaks and troughs of demand this profile can result in planning problems and
inefficiency for manufacturers. A significant benefit of MPS is that since it decouples
the customer demand from what is manufactured batch sizes can be tuned to
optimize the production process. Where demand is particularly spiky this can be of
enormous assistance producing a steady drum beat of manufacture (taking advantage
of batch sizes and minimal setup times) which can then ripple through the supply
chain.
2. Protects lead time and helps book future deliveries - A common complaint for many
organizations is that demand is loaded within lead time i.e. if a part takes 100 days
to manufacture its no good taking a customer demand for delivery in 50 days where
there is no stock you are struggling before youve even started the manufacturing
process. This can create panic amongst the staff throwing existing priorities into
disarray. Whilst there are a variety of methods that can be used to stop this MPS can
be a very effective method as it is the production schedule that drives the
manufacturing not the customer demand. This enables the organization to protect its
lead time but also assists planning in looking at when future customer requirement is
best supported by manufacturing output.
3. Acts as a single communication tool to the business - A major benefit to any
organization that adopts MPS is that it acts as asingle communication tool for the
business regarding its manufacturing plans. The MPS schedule is typically available
via the MRP system however whatever the method its imperative that its
communicated in an easily understandable form that can be used throughout the
organization.
4. Helps the Supply chain prioritize requirement - Having a fixed schedule enables the
supply chain team in particular the procurement function to communicate priorities
and requirements effectively. One of the key problems many manufacturing
organizations face where they are led by changing customer requirement is where the
supply chain gets reprioritized depending on the problem of the week. Its no
surprise that suppliers work best to regular smoothed demand where that demand in
unstable it can often lead to missed deliveries (of what was planned) let alone the
detrimental effect to relationships with suppliers that struggle to keep up with whats
really required.
5. Helps stabilize production - Master production schedules are best reviewed as part of
a formal business process which includes the relevant stakeholders and often requires
senior sign off before it is either loaded into the MRP system or is passed to
production for action. Its common the production schedule to be outputted from a
formal SIOP review. Typically master production schedules do not allow planning in
arrears so where failures have happened and product has not been manufactured as
planned these items are re-planned to a relevant point in the future. Another
common attribute of a master production schedule is that there is usually a fixed
planning window whereby plans do not get changed.
Example
The first 6 weeks of the plan maybe termed fixed. This enables production to
concentrate on whats ahead of them without worrying about reprioritizations. Additions
may be added to this fixed period but usually such amendments are tightly controlled.
Whilst, as with any business process, there are challenges associated with deploying a
master
production schedule there
are
some
enormous
and
tangible
benefits.
e. Production planning and aggregate planning
Production planning involves the means by which a manufacturing plan is
determined, information issued for its execution, data collected and recorded, which will
enable the plant to be controlled through all its stages. A few definitions are given here in
order to have clear understanding of the term Production Planning.
Objectives of Production Planning:

1.
To achieve coordination among various departments relating to production.
2.
To make adequate arrangement of men, money, materials, machines tools,

implements and equipment relating to production.
3.
To decide about the production targets to be achieved by keeping in view the sales
forecast.
4.
To keep production operation continuous.
5.
To achieve desired share of the market.
6.
To fix right type of man for right type of job.
7.
To achieve the desired level of profit.
8.
To make all arrangements to remove possible obstacles in the way of smooth

production.
9.
To achieve economy in production cost and time.
10.
To initiate production on modern lines.
11.
To operate the plant at planned level of efficiency.
12.
To develop alternative plans in order to meet any emergency or contingency.

Aggregate planning is the process of developing, analyzing, and maintaining a
preliminary, approximate schedule of the overall operations of an organization. The
aggregate plan generally contains targeted sales forecasts, production levels, inventory
levels, and customer backlogs. This schedule is intended to satisfy the demand forecast at
a minimum cost. Properly done, aggregate planning should minimize the effects of
shortsighted, day-to-day scheduling, in which small amounts of material may be ordered
one week, with an accompanying layoff of workers, followed by ordering larger amounts
and rehiring workers the next week. This longer-term perspective on resource use can
help minimize short-term requirements changes with a resulting cost savings. In simple
terms, aggregate planning is an attempt to balance capacity and demand in such a way
that costs are minimized. The term "aggregate" is used because planning at this level
includes all resources "in the aggregate
Example
As a product line or family. Aggregate resources could be total number of workers, hours
of machine time, or tons of raw materials. Aggregate units of output could include
gallons, feet, pounds of output, as well as aggregate units appearing in service industries
such as hours of service delivered, number of patients seen, etc.
f. Just in- time (Toyota Kanban System)

Just-in-Time Philosophy of complete elimination of waste
"Just-in-Time" means making "only what is needed, when it is needed, and in the
amount needed." For example, to efficiently produce a large number of automobiles,
which can consist of around 30,000 parts, it is necessary to create a detailed production
plan that includes parts procurement. Supplying "what is needed, when it is needed, and
in the amount needed" according to this production plan can eliminate waste,
inconsistencies, and unreasonable requirements, resulting in improved productivity.
Kanban System
In the TPS (Toyota Production System), a unique production control method
called the "kanban system" plays an integral role. The kanban system has also been called
the "Supermarket method" because the idea behind it was borrowed from supermarkets.
Such mass merchandizing stores use product control cards upon which product-related
information, such as a product's name, code and storage location, are entered. Because
Toyota employed kanban signs for use in their production processes, the method came to
be called the "kanban system." At Toyota, when a process refers to a preceding process to
retrieve parts, it uses a kanban to communicate which parts have been used. Evolution of
the kanban through daily improvements through continuous technological improvements,

the kanban system has evolved into the "e-kanban," which is managed using IT
methodologies and has increased productivity even further.
Why use a supermarket concept? A supermarket stocks the items needed by its
customers when they are needed in the quantity needed, and has all of these items
available
for
sale
at
any
given
time.
TaiichiOhno (a former Toyota vice president), who promoted the idea of Just-in-Time,
applied this concept, equating the supermarket and the customer with the preceding
process and the next process, respectively. By having the next process (the customer) go
to the preceding process (the supermarket) to retrieve the necessary parts when they are
needed and in the amount needed, it was possible to improve upon the existing inefficient
production system. No longer were the preceding processes making excess parts and
delivering them to the next process.

Single Minute Exchange of Dies - It is a method to reduce set up time. This
method was developed by Shigeo Shingo in Japan and was applied first in the automotive
industry.
Example: JET-MACHINE SETUP TIME REDUCTION

The manufacturing management decided that the company would test the SMED
workshop in order to reduce machine setup time.
Step 1: SELECTION OF THE MACHINE
The manufacturing management used the following criteria during machine selection:
machine setup times in the last three months,

number of machine setups in the last three months.
Using a weighted-scoring method, the manufacturing management decided that a
reduction of setup time would be tested on a KM 800 CNC Injection Molding Machine,
CraussMaffei KM 800-CNC injection molding machine
Step 2: DEFINITION OF TARGET SETUP TIME
The time recorder operator measured the time required for machine setup: 119.97
minutes. The manufacturing management decided that the target reduced setup time
would be 60 minutes i.e., 50% of the current value.
Step 3: SELECTION OF TEAM MEMBERS
The manufacturing management selected an 8-member team for the SMED workshop:
A team leader from the operation logistics department,

A team moderator from the technology department,
Team members,
A setup operator from the manufacturing department,
A protocol writer from the planning department,
A time recorder operator from the manufacturing department
A photographer from the manufacturing department
A cameraman from the supply department
A drawer of paths made by the setup operator from the process control department.
The manufacturing management sent the "SMED-workshop order" form to
departmental heads and team members for them to confirm their agreement with
participation in the workshop.
Step 4: DOCUMENTING ELEMENTS AND MICROELEMENTS OF JETMACHINE SETUP (existing procedure)

During the actual machine setup, the protocol writer entered the sequence of
elements and microelements of machine setup into his notebook. He also noted exact
setup times, reported by the time recorder operator. After recording the machine setup
elements, the protocol writer entered the data on the monitoring paper. The drawer of the
paths made by the setup operator made a drawing of the operator's movements.
Step 5: TRANSFORMATION OF JETMACHINE SETUP ELEMENTS AND
MICROELEMENTS INTO A VISUAL FORM
The data obtained on the jet-machine setup elements and microelements were
copied from the notebook to stickers to be affixed to a panel during the next step. The
stickers were labeled as X - if there was another microelement after the current one, E - if
the current microelement was the last one.
Step
6:
ANALYSIS
OF
JET-MACHINE
SETUP
ELEMENTS
AND
MICROELEMENTS
Phase 0: Analysis of the current situation of jet-machine setup At the beginning of
the session, the moderator projected the analytical card for entering the current situation
onto the panel. By affixing stickers to the panel (in agreement with other team members)
the current situation of jet machine setup was obtained.
Phase 1: Separation of internal and external setup microelements the moderator
presented each microelement of the current machine setup and the team decided whether
the microelement was internal or external.
The team members found that it would be possible to carry out 76.2 minutes (out
of the total 119.97 minutes) of setup during the jet-machine operationthis is the
duration of the external microelements of machine setup.
Phase 2: Transformation of internal microelements into external ones The
moderator moved (in agreement with team members) the green stickers (external
microelements) either to column 1 (starting activities) or to column 5 (completion

activities) (Table 5).
Phase 3: Improvements of internal and external microelements After the
separation of internal and external microelements of machine setup, the team made some
suggestions for improvements of internal and external microelements. The results of the
creativity workshop are presented in Table 6.
Phase 4: Standardization of microelements The team also carried out a
standardization of internal and external microelements and entered the results on the form
"Operating instructions for jet-machine setup". The new operating instructions had to be
tested, so the day after the first SMED workshop the setup operator carried out machine
setup according to the new operating instructions and completed internal microelements
within 39 minutes, which is an additional improvement of 4.77 minutes.
Step 7: REPEATED ANALYSIS OF MICROELEMENTS
The target setup time defined in step 2 was not achieved, so the team decided to repeat
the analysis of machine setup microelements. Before the second SMED workshop, the
team leader organized a creativity workshop in order to obtain suggestions for
improvements, the realization of which would additionally reduce setup time. The
creativity workshop indicated that setup time could be significantly reduced if the
following improvements were made:
introduction of fast hydraulic chuck-andcenter system for tool fixing,

introduction of fast hydraulic multi-joints.
CONCLUSION
The manufacturing management decided that the KM 800 jet-machine setup time
should be reduced. They selected team members to carry out a SMED workshop with the
goal of reducing the setup time. The target value was a reduction of 50%. The team first
documented the elements of the existing jet-machine setup, recorded microelement setup
times, drew the path made by the setup operator, took photos of setup details and filmed
the whole setup procedure with a video camera. An analysis of setup microelements was
then made, which indicated that some internal microelements could be transformed into
external ones. The team leader organized a creativity workshop, the goal of which was to
make improvements to internal and external microelements. The creativity workshop
yielded two suggestions for improvements that should significantly reduce the setup time.
The SMED workshop on the reduction of jet-machine setup time will be repeated until
the goal has been achieved: a setup time shorter than 10 minutes.
John Eric O. Etrellado, MBA Candidate

Just-in-time inventory system permits enterprises to reduce their overhead
expenses, especially stock holding costs while always ensuring that parts are available to
manufacture their products. Many companies use some sort of just-in-time inventory
management to serve their customers better while lowering the cost of doing business as
it lessens warehouse costs, creates better supply chain management and would create
better customer and management satisfaction by reducing waste and improves efficiency.
Just-in-time inventory approach can be referred as a production scheme which is
employed to upturn the level of efficiency and reduce waste by receiving goods only in
the form they are required in the production process, thus reducing the inventory costs.
This method calls for the producers to be capable of forecasting demand accurately.
Example
A machine manufacturer operates with a very low level of inventory, depending upon the
supply chain to deliver the parts which are required for manufacturing machines. The
parts required for manufacturing such machine do not arrive before or after they are
required, but just at the time they are required or needed.
But what are the conditions necessary for this kind of system of work? The
following should be considered:
Management buy-in and support at all levels of the organization are vital; if a just-intime manufacturing system is to be successfully adopted.
Sufficient resources should be distributed, so as to obtain technologically advanced

software, program or process, (especially in todays technological trend) that is
generally required if a just-in-time system.
Example:
Nowadays, accessible software for JIT System are being used by some multinational
companies, one of which is SAP Inventory System.
Building a close, trusting relationship with reputed and time-tested suppliers will
minimize unexpected delays in the receipt of inventory.
Example:
A manufacturing company is urgently in need of a supply for the completion of its
assembly line, in order to get immediate supply, the company should have close
workmanship and established relationship with its suppliers.
Just-in-time manufacturing cannot be adopted overnight. It requires commitment in

terms of time and adjustments to corporate culture would be required, as it is starkly
different to traditional production processes.
The design flow process needs to be redesigned and layouts need to be re-formatted,
so as to incorporate just-in-time manufacturing.
Lot sizes need to be minimized.
Workstation capacity should be balanced whenever possible.
Preventive maintenance should be carried out, so as to minimize machine

breakdowns.
Example:
Breakdowns might hinder urgent manufacturing so as to affect commitments for delivery.
To avoid this pitfall, companies need to establish maintenance measures.
Set-up times should be reduced wherever possible.
Quality enhancement programs should be adopted, so that total quality control

practices can be adopted.
Reduction in lead times and frequent deliveries should be incorporated.
Motion waste should be minimized, so the incorporation of new system might prove
to be a good idea when implementing a just-in-time manufacturing system.

Early makers inclined to suffer from a number of weaknesses, stemming from a
limited conceptualization of technology and an inadequate understanding of the role of
the small-scale sector in industrial development more broadly. There was also a lack of
practical experience with project implementation. However, in recent years important
advances have been made on all these fronts. Four features of recent technology
assistance programs that have tended to be associated with success are discussed, and
illustrated with evidence from different projects.
Here are the features of an appropriate process technology for a small-scale industry:
Embrace the notion that durable competitiveness of small producers in a competitive
economic environment requires that they develop internal capabilities to effectively assimilate,
use and adapt product and process technologies.
Are demand-driven
Example
A small scale enterprise has heard that there will be a vigorous growth in the demand of
its product for the next years. In order for this company to come along with the identified
opportunity, this company might consider an automation or adaptation of a process
technology to improve and increase its production system.
Include appropriate incentive structures based on market principles.
Target the assistance to groups of producers with common interests and problems,
and help them to organize themselves in collective bodies that can evolve into selfhelp institutions.
Example
We know that process technology installation can be very expensive and small scale
businesses may find it hard to invest for it. This is a substantial reason why some
businesses are hesitant to use process technology, however, if this small scale industries
will realize how partnership would work for them, they are more likely to form a
cooperative or an association that advocates sharing of resources for greater
capitalization. They would like to share investment for a process technology and
proportionally divide the return among themselves.

Motion studies are analyses of the activities made by workers as they go about
their daily routine duties. The studies' purpose is to determine if there are wasted
movements that are repeated and which therefore waste time and reduce the productivity
of the worker. The studies are used to try to set up workspaces in such a way that a
worker can do his/her routine duties as quickly and efficiently as possible.
Time and motion studies are a core set of tools which are used by the managers in
the industrial sector to enhance the performance or the operational efficiency. This is
done by breaking down the work into simpler units and setting the execution benchmarks.
The time and motion studies were initially used to improve productivity in manufacturing
units but later saw tremendous use even in the service industries.
Time and motion studies can be used to determine the best possible method to
perform the sub tasks in a workers job. This is the original piece-rate compensation
model to maximize the workers productivity and to identify and train the employees on
the basis of personality and skills analysis.
There are many merits accrued by the right implementation of time studies in the
development of work method in organizations. Some of the key merits are:
To improve the methods or procedures adopted in performance of various jobs.
Improving the lay out of the facility.
Example
In a manufacturing company it may include lay out for facilities such as overall plant
layout, lay out of workstations, layout of support facilities such as administrative offices
and reception area.
To improve utilization of resources.

Example
Resources like human resource/staff, machineries, equipment and financial.
To reduce human effort by proper design of processes.

Example
In hospitals this can also include reducing the efforts patients need to make for different
actions involved in their treatment as well as for their routine hospital treatment and
care.
To develop suitable working conditions.

Example
In construction sites, this would include design to suit the requirements of construction
workers as well as the supervisors.

Product design research is the method of finding opportunities in creating a new
product to be sold by a business to its customers. A very comprehensive concept, it is
essentially the efficient and effective generation and development of ideas through a
process that leads to new products.
It is a set of strategic and tactical undertakings, from idea generation to
commercialization, used to create a product design. In a systematic approach, product
designers conceptualize and evaluate ideas, turning them into tangible inventions and
products. The product designer's role is to combine art, science, and technology to create
new products that people can use. Their evolving role has been facilitated by digital tools
that now allow designers to communicate, visualize, analyze and actually produce
tangible ideas in a way that would have taken greater manpower in the past.
There are several product aspects that would be addressed by product design
research:
(a)
Production cost
In the end, the manufacturer wants an economically produced product.
Example
Businesses that know their production costs know the total expense to the production
line, or how much the entire process will cost to produce or develop the item. If costs are
too high, these can be decreased or possibly eliminated. Production costs can be used to
compare the expenses of different activities within the company. In production, there
are direct costs and indirect costs. For example, direct costs for manufacturing an
automobile are materials such as the plastic, metal or labor incurred to produce such an
item. Indirect costs include overhead such as rent, salaries or utility expense. Since we
are into product development, a company would likely to cut expenses in direct costs.
(b)
Price, Appearance, and Value

Example
The appearance attributes of designed products noted in the literature often reflect what
designers themselves perceive in a product design. This present research, however,
provides knowledge on how consumers perceive product appearance by identifying
appearance attributes that consumers use to distinguish the appearances of durable
products. Descriptions of appearance were generated by consumers in a free
categorization task. Knowledge of what appearance attributes are perceived by
consumers in a product design can help a designer to communicate certain pre-specified
meanings in a product. Customers might look and refer to what they just barely see, and
they often relate what they see to the price of the product and its value.
(c)
Usability and Functionality of the Final Product

Example
Usability is sometimes reduced to "easy to use," but this over-simplifies the problem and
provides little guidance for the user interface designer. A more specific definition can be
used to understand user requirements, formulate usability goals and decide on the best
techniques for usability evaluations. An understanding of the five characteristics of
usability effective, efficient, engaging, error tolerant, easy to learn helps guide the
user-centered design tasks to the goal of usable products. Consumers, as they use new
products, they more likely to realize how usable and functional a certain product is.
(d)
Maintenance & Support Services

How well the final product can be maintained: is the product easily reassembled,
disassembled, diagnosed, and serviced? Stakeholders' needs vary from one another and it
is the product designer's job to incorporate those needs into their design.
Example:
A software companys maintenance and support services provide customers and partners
with access to expert advice, timely problem resolution and software updates as well.
This company offer a number of different support packages, ranging from basic web-only
support services to premium solution support and maintenance services, offered on a 24
7 basis. These support offerings are bundled to match the needs and expectations of
our different customers and partners. This support also includes regular product checkup and updates, warranty and other essential services.
Rowell C. Marasigan, MBA Candidate

interfaces, and data for a system to satisfy specified requirements. One could see it as the
application of systems theory to product development. There is some overlap with the
disciplines of systems analysis, systems architecture and systems engineering. If the
broader topic of product development "blends the perspective of marketing, design, and
manufacturing into a single approach to product development," then design is the act of
taking the marketing information and creating the design of the product to be
manufactured. Systems design is therefore the process of defining and developing
systems to satisfy specified requirements of the user. Until the 1990s systems design had
a
crucial
and
respected
1990s standardization of
role
hardware
in
the data
and
software
processing industry.
resulted
in
the
In
the
ability
to
build modular systems. The increasing importance of software running on generic

platforms has enhanced the discipline of software engineering.
Object-oriented analysis and design methods are becoming the most widely used
methods for computer systems design. The UML has become the standard language in
object-oriented analysis and design. It is widely used for modeling software systems and
is increasingly used for high designing non-software systems and organizations.
Production is considered as a process of adding value to the final product. Describe the
processes that contribute to the addition of value to the final product.
The Man-Machine (German Language Edition: Die Mensch-Maschine) is the

seventh studio album by German electronic band Kraftwerk, released in May 1978. It
contains the song "The Model" which was a chart-topping single in the UK in 1982. This
was the first Kraftwerk album to see Karl Bartos co-credited with songwriting along with
Htter & Schneider. Emil Schult co-wrote the lyrics for "The Model".
Musically, it builds on Trans-Europe Express. The initial recording had been
made at Kraftwerk's own Kling Klang studio, but further work was done at nearby Studio
Rudas, where Detroit sound engineer Leanard Jackson of Whitfield Records, who had
worked on Rose Royce's second album the previous year, was hired to work on the final
sound-mix.
The cover design imitates the graphic style of the 1930s Modernist movement,
particularly that of the designer/architect El Lissitzky, whose inspiration is acknowledged
in the album credits. The rear cover of the album is actually an adaptation one of his
geometric page designs for a children's book, From Two Quadrants (specifically, the
upper right quarter of the page captioned "And on the Black was established Red
Clearly").
Coloured vinyl pressings
The first pressings of the album distributed in Germany (with tracks sung in
German) and in France (the English language version) were manufactured with
translucent red vinyl, that carried through the dominant colour scheme of the front cover
design. The French red vinyl version was pressed in a larger quantity, with the less
numerous German red vinyl becoming a rarer and much sought after collectible item as a
consequence. In the rest of the world the album was only ever released on black vinyl,
but in the UK a 12" single of the track Neon Lights was eventually released in 1979
pressed on an appropriately luminous vinyl.
A time
and
motion
study (or time-motion
study)
is
a business efficiency technique combining the Time Study work of Frederick Winslow
Taylor with the Motion Study work of Frank and Lillian Gilbreth (not to be confused
with their son, best known through the biographical 1950 film and book Cheaper by the
Dozen). It is a major part of scientific management (Taylorism). After its first
introduction, time study developed in the direction of establishing standard times, while
motion study evolved into a technique for improving work methods. The two techniques
became integrated and refined into a widely accepted method applicable to the
improvement and upgrading of work systems. This integrated approach to work system
improvement is known as methods engineering and it is applied today to industrial as
well as service organizations, including banks, schools and hospitals.
Time and motion study have to be used together in order to achieve rational and
reasonable results. It is particularly important that effort to be applied in motion study to
ensure equitable results when time study is used. In fact, much of the difficulty with time
study is a result of applying it without a thorough study of the motion pattern of the job.
Motion study can be considered the foundation for time study. The time study measures
the time required to perform a given task in accordance with a specified method and is
valid only so long as the method is continued. Once a new work method is developed, the
time study must be changed to agree with the new method.
Design research was originally constituted as primarily research into the process
of design, developing from work in design methods, but the concept has been expanded
to include research embedded within the process of design, including work concerned
with the context of designing and research-based design practice. The concept retains a
sense of generality, aimed at understanding and improving design processes and practices
quite broadly, rather than developing domain-specific knowledge within any professional
field of design. Design Research emerged as a recognizable field of study in the 1960s,
initially marked by a conference on Design methods at Imperial College London, in
1962. It led to the founding of the Design Research Society (DRS) in 1966. John
Christopher Jones (who initiated the 1962 conference) founded a postgraduate Design
Research Laboratory at the University of Manchester Institute of Science and
Technology, and L. Bruce Archer founded the postgraduate Department of Design
Research at the Royal College of Art, London, becoming the first Professor of Design
Research.
The Design Research Society has always stated its aim as: to promote the study
of and research into the process of designing in all its many fields. Its purpose therefore
is to act as a form of learned society, taking a scholarly and domain independent view of
the process of designing.
Some of the origins of design methods and design research lay in the emergence
after the 2nd World War of operational research methods and management decisionmaking techniques, the development of creativity techniques in the 1950s, and the
beginnings of computer programs for problem solving in the 1960s. A statement by Bruce
Archer encapsulated what was going on: The most fundamental challenge to
conventional ideas on design has been the growing advocacy of systematic methods of
problem solving, borrowed from computer techniques and management theory, for the
assessment of design problems and the development of design solutions. Herbert
Simonestablished the foundations for a science of design, which would be a body of
intellectually tough, analytic, partly formalizable, partly empirical, teachable doctrine
about the design process.
Marianne C. Estrada, MBA Candidate

There are several reasons why companies would go for redesigning its production
process. It maybe because of the growing demands. So to meet this demand they have to
improve the traditional process that produces lower quantity. Another consideration
would be because of the new business opportunities, expansion to new kind of
businesses.
This requires new process to cope up with the new venture.
New
technologies would also be a reason of redesigning the production process. Acquiring

new technologies means reengineering.
Process reengineering is redesigning or reinventing how we perform our daily

work, and it is a concept that is applicable to all industries regardless of size, type, and
location.
While selected elements of process reengineering are well documented in the late
1800s and early 1900s, process reengineering as a body of knowledge or as an
improvement initiative, takes the best of the historical management and improvement
principles and combines them with more recent philosophies and principles, which make
all people in an organization function as process owners and reinvent processes. It is this
combination of the old and the new as well as the emphasis on dramatic, rapid
reinvention that makes process reengineering an exciting concept. The differences
between continuous process improvement and process reengineering are outlined in

Figure 1.
The first question in process reengineering is: "Why are we doing this at all?"
Answering this question is the beginning of the immediate, dramatic change and the
application of supporting technical and behavioral concepts and tools that are necessary
to implement process reengineering. To accomplish this, organizations must foster an
environment that encourages quantum leaps in improvement by throwing out existing
systems and processes and inventing new ones.
The intent of process reengineering is to make organizations significantly more
flexible, responsive, efficient, and effective for their customers, employees and other
stakeholders. According to field experts Michael Hammer and James Champy, process
reengineering requires the "fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of

performance, such as cost, quality, service, and speed."
If process reengineering is to work, a business's priorities must change in the
following ways: (1) from boss to customer focus; (2) from controlled workers to
empowered, involved process owners and decision makers; (3) from activity-based work
to a results orientation; (4) from scorekeeping to leading and teaching so that people
measure their own results; (5) from functional (vertical) to process (horizontal or cross
functional) orientation; (6) from serial to concurrent operations; (7) from complex to
simple, streamlined processes; (8) from empire building and guarding the status quo to
inventing new systems and processes and looking toward the future (i.e., from the
caretaker mentality to visionary leadership).
As organizational priorities change, the culture will change as well. As people understand
the vision for a better culture with better capabilities and results, they will be ableindividually and as members of teams-to contribute positively to make the organizational
vision a reality.
REASONS FOR PROCESS REENGINEERING

There are several reasons for organizations to reengineer their business processes:
(1) to re-invent the way they do work to satisfy their customers; (2) to be competitive; (3)
to cure systemic process and behavioral problems; (4) to enhance their capability to
expand to other industries; (5) to accommodate an era of change; (6) to satisfy their
customers, employees, and other stakeholders who want them to be dramatically different
and/or to produce different results (7) to survive and be successful in the long term; and
(8) to invent the "rules of the game."
Whatever the reason for reengineering, managers should ask themselves: What do
our customers and other stakeholders want/require? How must we change the processes
to meet customer and other stakeholder requirements and be more efficient and effective?
Once streamlined, should the processes be computerized (i.e., how can information
technology be used to improve quality, cycle time, and other critical baselines)?
Processes must be streamlined (i.e., re-invented) before they are computerized.
Otherwise, the processes may produce results faster, but those results may not be the ones
needed.

Machine is generally defined as a semi or fully automated device that magnifies
human physical and/or mental capabilities in performing one or more operations.
It
makes mans job faster and easier and also increase production output. As time goes,
machine became part of medium and large business operations. Machine takes place
human work because of its faster result and bigger output most especially in terms of
mass production. Even though, man is still there to run machine and machine is not
flexible as human. It takes time to set up a machine that is being used in production
operation. This waiting time could incur cost and waste because of unproductive period.
Another cost is possibly came from unexpected malfunctions like what happened to
Richards Industries in Cincinnati, Ohio. They encounter different problems because of
machine malfunctions.
The company manufactures specialty valves for a variety of industries, including
biotech, pharmaceutical, chemical, petroleum and power generation. Several years ago,
the company recognized the symptoms of its own "less-than-optimal lifestyle." Among
them were long lead times, excessive work in process, missed delivery dates, lost sales
and outages in finished product inventory.
In response, the company adopted lean manufacturing, a multipronged
approach to systematically reducing waste in all aspects of its shop floor operations. Just
as individuals have turned their health around by going on a diet, quitting smoking or
starting an exercise program, Richards Industries has taken some clear steps to protect
and improve its health as a manufacturer.
The company rearranged its machine tools into cells. It moved part inspection to
the shop floor and eliminated a major bottleneck in the inspection lab. Other bottlenecks,
such as long dry times in the paint department, were also eliminated. Work areas were
reorganized to make them more orderly and less cluttered.
These changes have helped the company shorten lead times, slash batch sizes and
reduce work in process. These changes have also focused the company's attention on
another important aspect of lean manufacturingsetup reduction. Reducing setup time is
essential to reducing lead times, batch sizes and work-in-process levels. So for the last 2
years, the company has worked hard to adopt quick change-over procedures in its
machining operations. The results have been impressive.
Lean gives priority to simple, small, and continuous improvement such as

changing the placement of a tool, or putting two workstations closer together. As these
small improvements are added together, they can lead to a higher level of efficiency
throughout the whole system.
Although the aim is to remove as much waste as possible by continuously refining

your processes, you probably won't eliminate waste completely.
Lean manufacturing process has three stages, these are identify waste, analyze the
waste, and find the root cause, and solve the root cause, and repeat the cycle .
Stage 1 Identify Waste. According to the Lean philosophy, waste always exists, and no
matter how good your process is right now, it can always be better. This commitment to
continuous improvement is known as Kaizen . One of the key tools used to find this
waste is a Value Stream Map (VSM). This shows how materials and processes flow
through your organization to bring your product or service to the consumer. It looks at
how actions and departments are connected, and it highlights the waste. As you analyze
the VSM, you'll see the processes that add value and those that don't. You can then create
a "future state" VSM that includes as few non-value-adding activities as possible. Stage
2 Analyze the Waste, and Find the Root Cause. For each waste you identified in the
first stage, figure out what's causing it by using Root Cause Analysis . If a machine is
constantly breaking down, you might think the problem is mechanical and decide to
purchase a new machine. But Root Cause Analysis could show that the real problem is
poorly trained operators who don't use the machine properly. Other effective tools for
finding a root cause include Brainstorming and Cause and Effect Diagrams. Stage 3
Solve the Root Cause, and Repeat the Cycle.
Using an appropriate problem-
solving process, decide what you must do to fix the issue to create more efficiency.
Inventory management is define as the process of managing inventories in such a

way as to minimize inventory cost, including both holding costs and potential stock-outcost. Holding cost is the cost of storing products until they are purchased or shipped to
customers. Stocks out cost are the cost of sales lost when items are not in inventory. Of
course, holding cost can be reduced by minimizing inventories, but then stock-out cost
could be financially threatening to the organization.
And stock-out cost can be
minimized by carrying very large inventories, but then holding cost would be enormous.
(Business by William Pride, Robert Hughes, Jack Kapoor).
Therefore, there should be a balance in holding and stock-out cost. Businesses

today, uses technology to help them manage inventories. The critical part is to have an
on-time, accurate inventory. This is where just-in-time system will be implemented. Justin-time means production strategy striving to improve a business return on investment by
reducing in-process inventory and associated carrying costs. To meet JIT objectives, the
process relies on signals or Kanban between different points in the process. Kanban are
usually "tickets" but can be simple visual signals, like the presence or absence of a part
on a shelf. Implemented correctly, JIT focuses on continuous improvement and can
improve a manufacturing organization's return on investment, quality and efficiency. To
achieve continuous improvement, key areas of focus are: flow, employee involvement,
quality.
Inventory turnover will be more efficient because of the updated system. The
flow of production materials from the supplier to buyer has higher potential of accuracy.
Employee will undergo some training to adopt with the new system.
Employee
involvement in implementing JIT is very high that is why employee must be well verse
and committed to work. And of course successful implementation of JIT will lead the
company to quality output. Lastly, through the use of JIT, company will maintain its
inventory
low,
save
time,
money
and
cost
of
inventories.

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MIDTERM & FINAL

7. Company XLT has put in place elaborate plant maintenance programmed.

be as a result of the management problems inherit in such firms.

aspects of product management that may account for this

11. One of the earliest analytical methods in

production is the motion study.

method for an organization.

Kristel L. Cruz, MBA Candidate

Answer to Question No. 6:

Important Factors to Toyota Success:

then replenished when

they are used.

Inventory levels decreased 75 percent.

For an organization to have an effective and efficient manufacturing unit, it is

Benefits of Motion Study

Zarvie-An P. Arcega, MBA Candidate

Answer to Question No. 1

4. Consolidation or collaboration is coming. An impending acquisition,

Answer to Question No. 3:

When looking at activities in a process, we must determine if the activity is

By removing waste activities, the cost of the product to the organization is

Answer to Question No. 9:

The proposed solution to face the economic challenge is modularization and

Answer to Question No. 3

b. Shop Floor Control

c. MRP I & MRP II

e. Production planning and aggregate planning

Production planning problems are characterized by a demand schedule, a

f. Just in- time ( ToyotaKanban System)

Just-in-time offers a smooth, continuous and optimized workflow, with carefully

Joshua V. De Vera, MBA Candidate

Answer to Question No. 1:

and the strategic

The logical design of a system pertains to an abstract representation of the data

Answer to Question No. 2:

resources; degraded process throughput; contamination from undetected nonconformities,

operations. Where operations are frequently repeated, it is easier to recognize processing

Answer to Question No. 3:

Answer to Question No. 4:

Potential benefits of institutional support to small firms are large. By improving

Arnold L. Dacuma, MBA Candidate

Answer to Question No. 1

System control and backup or recovery.

down into three sub-tasks:

User Interface Design

Answer to Question No. 3:

changeover. No more walking around and searching.

parallel if we used two-person team for changeovers.

can be pre-set ahead of time.

wasted through disorganization and general messiness. Improving elements and

Answer to Question No. 4:

Janice T. Buenavista, MBA Candidate

Answer to Question No. 1:

3. Environmental and legal aspects

Answer to Question No. 2

Second, deliveries are frequent and in small lots just as the

In addition, is the improvement to plant layout. This is done by arranging the

Conversion of planned orders to process/production

Production and process order scheduling

Capacity requirements planning

Material availability assessment

Release of production/process orders