Transcript IE3104: Supply Chain Modeling: Manufacturing & Warehousing

IE3104: Supply Chain Modeling:
Manufacturing & Warehousing
Instructor: Spyros Reveliotis
Office: Room 316, ISyE Bldng
tel #: (404) 894-6608
e-mail: [email protected]
homepage: www.isye.gatech.edu/~spyros
“Course Logistics”
• TA: Mr. Yonggang Guen
• Office Hours: (Reveliotis) 2-3:30pm MW (ow, an opendoor policy will be generally adopted, but an appointment
arranged by e-mail is preferred) (Guen) 2-3:30pm TuTh
• Grading policy:
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Homework: 25%
Midterm I: 20% (Tent. Date: Friday, Feb. 9)
Midterm II: 20% (Tent. Date: Friday, March 30)
Final: 35%
Exams closed-book, with 2 pages of notes per exam
Make-up exams and Incompletes: Only for very serious reasons,
which are officially documented.
• Course Textbook: “Production and Operations Analysis”
(3rd Ed.) by Steven Nahmias, Irwin (plus material
circulated in class)
Course Objectives
(What this course is all about?)
• How to design and operate manufacturing and
warehousing facilities (and more…)
– The problem context and the key (conceptual) issues
– A (hierarchical) decomposition framework
– Quantitative analysis and techniques for addressing the arising subproblems
– Computational implementation of the presented techniques (e.g.,
Excel, LP solvers, etc.)
– Emerging issues and needs from a globalized and internet-based
economy
Organizational Operations
• Organization / Production System: A transformation
process (physical, locational, physiological, intellectual,
etc.)
Inputs
Outputs
•Materials
•Prod. Equip.
•Labor
•Manag. Res.
Organization
•Goods
•Services
• Supply or Value Chain / Network:
Stage 1
Stage 2
Stage 4
Suppliers
Stage 3
Stage 5
Customers
Operations Management (OM)
The design and operation of organizations and production systems
The three Basic Functions of a Contemporary Organization:
Operations
Marketing
(Sales)
Finance
(Accounting)
OM Decision Areas
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
Service and Product Design
Quality Management
Process and capacity design
Location
Layout design
What product/service should be offered?
How should these products/services be
designed?
How quality is defined and measured?
Who is responsible for quality?
What processes will these products
require and in what order?
What technology should be used?
Where should we put the facilities?
What drives the location decisions?
How should the facility be arranged?
How large should it be to meet the
production requirements?
OM Decision Areas (cont.)
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
Human Resources and job design
Supply Chain Management
Inventory and Material
Requirements Planning (MRP)
Intermediate and Short-Term
Scheduling
Maintenance
How much can we expect our
employees to produce?
How do we provide a reasonable work
environment?
Should this component be manufactured
or procured? (make or buy decisions)
What suppliers should be used and how
they should be integrated in the
operations?
How much inventory of each item
should be kept?
When procurement/production orders
should be placed?
How should labor levels be
adjusted to meet effectively
next year’s demand?
What should be produced next on this
machine?
At what periods should preventive
maintenance be scheduled?
Corporate Mission:
What (should) drive the OM decisions
• The mission of the organization
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defines its purpose, i.e., what it contributes to society;
states the rationale for its existence;
provides boundaries and focus;
defines the concept(s) around which the company can rally;
• Functional areas and departments define their missions
such that they support the overall corporate mission in a
cooperative and synergistic manner.
Corporate Mission Examples
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
• Merck: The mission of Merck is to provide society with superior
products and services-innovations and solutions that improve the
quality of life and satisfy customer needs-to provide employees with
meaningful work and advancement opportunities and investors with a
superior rate of return.
• FedEx: FedEx is committed to our People-Service-Profit philosophy.
We will produce outstanding financial returns by providing totally
reliable, competitively superior, global air-ground transportation of
high-priority goods and documents that require rapid, time-certain
delivery. Equally important, positive control of each package will be
maintained utilizing real time electronic tracking and tracing systems.
A complete record of each shipment and delivery will be presented
with our request for payment. We will be helpful, courteous, and
professional for each other, and the public. We will strive to have a
completely satisfied customer at the end of each transaction.
Defining Functional and Departmental
Missions Example
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
• Sample Company Mission: To manufacture and service a growing and
profitable worldwide microwave communications business that
exceeds our customers’ expectations.
• Sample OM Mission: To produce products consistent with the
company’s mission as the worldwide low-cost manufacturer.
• Sample OM Department Missions:
– Product design: To lead in research and engineering competencies in all
areas of our primary business, designing and producing products and
services with outstanding quality and inherent customer value.
– Layout design: To achieve, through skill, imagination, and resourcefulness
in layout and work methods, production effectiveness and efficiency while
supporting high quality of work life.
– Inventory: To achieve low investment in inventory consistent with high
customer service levels and high facility utilization.
– Scheduling: To achieve high levels of throughput and timely customer
delivery through effective scheduling
Strategy
How the organization will achieve its mission
Responsiveness (Reliably faster; Efficiently
accommodating innovation and demand fluctuation;
e.g., Dell, Overnight Delivery Services)
Competitive Advantage through which
the company market share is attracted
Cost Leadership (Cheaper;
e.g., Wal-Mart, Southwest
Airlines, Generic Drugs)
Differentiation (Better;
e.g., Luxury cars, Fashion Industry,
Brand Name Drugs)
Implementing Corporate Strategy
through OM
• In the OM context, corporate strategy is observed and facilitated by
appropriately defined objectives and/or constraints in all relevant
decision making; e.g.,
– cost and/or quality constraints during the product design
– minimizing inventory operational costs while ensuring that customer
demand is met successfully with certain probability
– structuring and stuffing the company distribution network in order to
ensure delivery times below a certain level, with minimal operational
costs
• OM-based strategies enabling currently sought competitive
advantages:
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Product Design and Volume Flexibility
Broad Product Line and Product Customization
Low Price / Reduced Operational Costs
Fast Delivery
High Quality
After-Sales Service
Factors affecting Corporate Strategy
• External
– Emerging strengths and weaknesses of competitors => new threats
and opportunities, respectively
– New industry entrants
– Development of substitute products
– Development of new technologies
– Legal developments (e.g., environmental concerns and regulations)
– Economic and political developments (e.g., new international
agreements, political crises)
• Internal
– Company politics and restructuring
– Modified relationships with customers and suppliers
– Product Life Cycle
Strategy and Issues during a Product’s Life
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
Introduction
• Best period to
increase market
share
•R&D engineering
critical
Growth
•Practical to
change price or
quality image
•Strengthen
niche
Maturity
•Poor time to change
image, price or
quality
•Competitive costs
become critical
•Defend market
position
Decline
•Cost control
critical
Sales
Time
• Frequent product
and process
changes
•Short production
runs
•High production
costs
•Limited models
•Attention to
quality
•Forecasting
critical
•Products and
process reliability
•Increase capacity
•Shift towards
product focus
•Enhance
distribution
•Standardization minor product
changes
•Optimum capacity
•Process stability
•Long production
runs
•Little product
differentiation
•Overcapacity in
the industry
•Reduce capacity
and eventually
prune line to
eliminate items not
returning good
margin
Strategy Development Process
(J. Heizer & B. Render, “Operations Management”, Prentice Hall)
Environmental Analysis
Understand the environment, customers, industry, and competitors
Identify your strengths, weaknesses, opportunities and threats.
Determine Corporate Mission
State the reason for the firm’s existence and
identify the value it wishes to create
Form a Strategy
Build and maintain a competitive advantage, such as low price,
quick delivery or quality, by identifying and developing
the critical success factors
Back to the course objectives...
Strategic Planning
Production Planning
&
Control
Warehouse
Management
•Forecasting
•Production Planning
•Resource and Capacity
Planning
•Materials Requirement
Planning
•Production Control
•Warehouse Organization
•Storage Policies
•Picking Policies
•Replenishment Policies
Facility Design
Suggested Reading
• From your textbook:
– Introduction: Sections 1, 2
– Chapter 1: 1.0-1.8