Investigating the Factors that Must Be Considered by a Firm Before Changing From a Batch to a Flow Method of Production
There are three different types of production methods; job, batch and
flow production. If a firm is considering changing its batch to a flow
method, it must keep various factors in mind before doing this. The
change from batch to flow requires investing in new capital so the
financial, marketing, HR and operations department all play an
important role in this decision.
First of all a company will have to decide if there is enough demand
for the flow method of production. The demand can increase for various
reasons, there may be a boom in the economy, the company may be
targeting a larger segment now, it may be going from a niche to mass
market and the product may be gaining popular appeal. The company will
have to see whether the type of product is one where standardization
will work, or whether providing customization and variety is the
essence and charm of the product. For example if a company like
Abercrombie & Fitch starts mass production of its clothes, it would
not appeal to its present customers anymore who prefer its
exclusivity.
A firm will have to look at its financial status, and whether is has
enough money to invest in new technology, even if it does not have the
necessary finances can it arrange for loans? Loans are better to take
in times where the interest rate is low, so the cost of borrowing
decreases. The firm can also change its legal structure and go
‘public’, the share capital can be invested in new technology. However
this is more beneficial for firms who are established and enjoy a good
reputation.
The finance managers will also have to bear in mind that the cost of
holding will increase as they produce a larger quantity, this may lead
to cash-flow problems and the liquidity of a company will decrease as
its finances are tied up in stocks and raw material. This will not be
Cost effectiveness-Increase in quantity produced due to a proper flow of raw materials will allow the firm to enjoy economies of scale and be cost effective; the costs of production will decrease with increases in quantity produced.
how applying six sigma methodology can do to address these problems. According to the author the two most common causes of software project failures are customer requirement problems and estimating problems. He offers two case studies as examples of how six sigma can address these aspects of software implementation. The first case study discusses some of the ways six sigma can help with customer requirements, and the second case discusses the role of six sigma in schedule estimating.
For example: Each product shipped is about $1,000. 1,000 units * $1,000 = $1 million if parts get shipped as finished products. They need to use external heat-treat (outsource). Also, quality inspection is currently done prior to final assembly. Defective items are lost time on bottleneck because it went through the machine and now is worthless. They need to do QC before bottleneck - that way, they will not loose time on bottlenecks on any defective parts - won't loose throughput. Also, they need to make sure the process controls on bottleneck parts are very good.
There is a lot of literature on the concept of continuous improvement (CI). Studies show that CI is very important to creating competitive advantages in highly competitive industries such as the automobile industry (Bhuiyan & Baghel 2005; Li et al. 2009; Schaeffer, Cadavid, & Backström 2010). These studies suggest that manufacturing firms use CI to eliminate waste in all organisational systems and processes (Bhuiyan & Baghel 2005; Li et al. 2009). Currently, manufacturing firms use lean manufacturing, six sigma, lean six sigma, and the Kaizen methods of CI methodologies to reduce wastages, simplify the production line, and improve quality (Swink & Jacobs 2012).
Intense global competition, rapid technological changes, advances in manufacturing and information technology and discerning customers are forcing manufacturers to optimize manufacturing process, operations, and all the possible nodes of supply chains that enable them to deliver high-quality products in a short period of time (Karim et al. 2013). The origins of lean thinking can be found on the shop-floors of Japanese manufacturers and, in particular, innovations at Toyota Motor Corporation (Shingo, 1981, 1989; Monden, 1994; Ohno, 1988). These innovations, resulting from a scarcity of resources and intense domestic competition in the Japanese market for automobiles, included the just-in-time (JIT) production system, the Kanban method of pull production, respect for employees and high levels of employee problem-solving/automated mistake proofing. This lean operations management design approach focused on the elimination of waste and excess from the tactical product flows at Toyota (the Toyota "seven wastes") and represented an alternative model to that of capital-intense mass production with its large batch
In the 15th century, ‘lean thinking’ was introduced in Arsenal, Venice, but Henry Ford was the first person to integrate a complete production process. In 1913 Michigan, interchangeable parts with standard work to create flow production. The company used special purpose machines to assemble and manufacture the components on the line directly. The first model manufactured by Ford was limited to one co...
Alex and Jonah both agreed that if these 4 factors are improved, the speed of production will increase, respond to orders will more quickly, and therefore the number of the customers and profitability of the plant will increase. For the lower cycle time, Jonah made a recommendation about reducing the number of work pieces to cut in half that are going to be processed by non-bottleneck machines. This movement would provide some positive results; the investment needed to run the plant would cut in half, the money dedicated to the stock-material will decrease, and it will reduce the costs by taking %50 less goods from suppliers. Another important benefit of reduce the number of work pieces by half is it will shorten the production time. But there are some limitations about this strategy, for example reducing the number of work pieces by half means 2 times more adjustment in terms of labor force and the cost looks as though it’s gone up because of the additional set-ups. Another limitation is about delivery cost, because only high numbers of orders would be benefit from the quantity discount, thus decreasing the batch size will be cause to the increase in the delivery
Persoon, T.J., Zaleski, S., & Frerichs, J., (2006) Improving preanalytic processes using the principles of lean production (Toyota Production System). Am J Clin Pathol. 2006 Jan;125(1):16-25.
The procedure of Lean Manufacturing has been the principle concerns and issues of numerous manufacturing companies all through the world. Numerous procedures paving the way to lean manufacturing have affected this significantly, for example, Interchangeable parts, Just in Time Production, the Ford Assembly line, and the Toyota Production Systems.
It is a step of defining the goals of the projects and the results are aimed at reaching certain levels of productivity of customer satisfaction. The second stage is measure, and it is the stage of collecting data and facts and evaluating current operational performance. The third stage is analyze with the purpose of developing methods and theories that will best suit the solving of the problem; it is also a stage of detecting cause-and-effect ties of the processes. The fourth stage is improve, it is aimed at generating ideas for reaching the desired process improvement. Finally, there is the control stage that is about monitoring the operations to find out whether the process of improvement is smooth and the problems were solved (Meredith & Shafer,
The concept of an economy of service and flow is closely tied to the idea of closed-loop, cradle to grave product management. Producers
Within the manufacturing sector, supply chain management is important since it involves many movements of goods, raw materials and finished goods. It is therefore important to maintain this free flow of goods with in the manufacturing industries to ensure that all goods are delivered on a timely manner (Ross, 2010). In manufacturing, there is need for inward movement & storage of raw materials, inventory for the work-in-progress, and finished goods movements. Further, finished goods that have been supplied can also be returned to ...
Many historical milestones have shaped Operations Management, some of these are computer age, scientific management and human relations. For over two century’s operations and production management has been recognized as an imperative factor in a nation 's financial development.
In the new global economy, with the improved information technology, and the increased competition, a study by Levy (2007) shows that, many companies have attempted to recognize and implement lean production (LP) systems, established by Toyota, that involve goals such as just-in-time (JIT) delivery, low inventories, zero defects, flexible production in small batches and close practical cooperation with suppliers. Therefore, this paper will present how Kellogg’s has been able to manage its lean production in a very efficient way to create long term value products and competitive advantage.
Krajewski, L. J., Malhotra, M. K., & Ritzman, L. P. (2016). Operations Management: Processes and Supply Chains: Global Edition . Pearson.