Summary materials management
Chapter 1:
Operations management is affected by many factors:
- Government: government applies regulations to such areas, as the rules for the
environment, safety, product liability and taxation.
- Economy: economic conditions influence the demand of a company’s products or services.
Competition, shift in age of population, needs of ethnic groups, low population growth and
free trade between countries are all examples of this.
- Competition: today the competition is more severe than ever before, because of the
worldwide shipping from companies all over the world, the shipping is much more efficient
then for example 20 years ago. Communications from one country to another has become
much easier over the years.
- Customers: customers these days have much higher expectations, they want a fair price,
higher quality, faster delivery, better services and higher flexibility.
- Quality: because of the international competition that is developing, companies are trying to
exceed the expectations of their customers.
Order qualifiers: customer requirements, based on price quality and delivery.
Order winners: the characteristics of a product that persuade a company’s customers to buy their
products and not the products of their competitors.
Delivery lead time: for the supplier this is the time from when the order comes in until it is delivered
at the customer. For the customer this may also include time for order preparation and transmittal.
Basic process strategy:
- Engineer-to-order: the customer wants a product that is designed by him or herself, delivery
lead time is long.
- Make-to-order: the manufacturer starts producing when an order comes in, can include
custom-designed components. Delivery time is reduced.
- Configure-to-order: customer is allowed to configure a product based on various features
and options. Delivery time is reduced.
- Assemble-to-order: the product is made from standard components or options that the
manufacturer can inventory and assemble according to customer order. Delivery time is
further reduced.
- Make-to-stock: supplier manufactures the goods and sells from a finished goods inventory.
Delivery time is shortest.
Supply chain concept changes over time:
- There has been an explosive growth in computer capability and associated software
applications such as enterprise resource planning (ERP).
- Global competition has been growing a lot.
- There has been growth in technological capabilities for products and processes.
- Many companies are subcontracting more of their work to suppliers.
Reverse logistics: recycling of materials.
, Metrics give us control by superiors, reporting of data to superiors, communication, learning and
improvement.
Production control has six major challenges:
- Customers that are rarely satisfied
- A supply chain that is large and must be managed
- A product life cycle that is getting shorter
- A vast amount of data
- An emphasis on profit margins that are more squeezed
- An increasing number of alternatives.
Performance measure: must be both qualified and objective and contain at least two parameters.
Performance standards: goals of a company that have target values.
The necessary steps to implementing these two programs:
- Make company goals and objectives
- Define performance
- State the measurement to be used
- Set performance standards
- Educate the participant
- Make sure the program is consistently applied
To get the most profit, these are the main objectives:
- Provide best customer service
- Provide lowest production cost
- Provide lowest inventory investment
- Provide lowest distribution costs
Materials management: the concept of having one department responsible for the flow of materials,
from supplier through production to consumer, thereby minimizing total costs and providing a better
level of customer service.
The objectives of materials management:
- Maximize the use of firm’s resources
- Provide the required level of customer service
Manufacturing planning and control are responsible for the planning and control of the flow of
materials through the manufacturing process. The primary activities are:
- Production planning
- Implementation and control
- Inventory management
Chapter 1:
Operations management is affected by many factors:
- Government: government applies regulations to such areas, as the rules for the
environment, safety, product liability and taxation.
- Economy: economic conditions influence the demand of a company’s products or services.
Competition, shift in age of population, needs of ethnic groups, low population growth and
free trade between countries are all examples of this.
- Competition: today the competition is more severe than ever before, because of the
worldwide shipping from companies all over the world, the shipping is much more efficient
then for example 20 years ago. Communications from one country to another has become
much easier over the years.
- Customers: customers these days have much higher expectations, they want a fair price,
higher quality, faster delivery, better services and higher flexibility.
- Quality: because of the international competition that is developing, companies are trying to
exceed the expectations of their customers.
Order qualifiers: customer requirements, based on price quality and delivery.
Order winners: the characteristics of a product that persuade a company’s customers to buy their
products and not the products of their competitors.
Delivery lead time: for the supplier this is the time from when the order comes in until it is delivered
at the customer. For the customer this may also include time for order preparation and transmittal.
Basic process strategy:
- Engineer-to-order: the customer wants a product that is designed by him or herself, delivery
lead time is long.
- Make-to-order: the manufacturer starts producing when an order comes in, can include
custom-designed components. Delivery time is reduced.
- Configure-to-order: customer is allowed to configure a product based on various features
and options. Delivery time is reduced.
- Assemble-to-order: the product is made from standard components or options that the
manufacturer can inventory and assemble according to customer order. Delivery time is
further reduced.
- Make-to-stock: supplier manufactures the goods and sells from a finished goods inventory.
Delivery time is shortest.
Supply chain concept changes over time:
- There has been an explosive growth in computer capability and associated software
applications such as enterprise resource planning (ERP).
- Global competition has been growing a lot.
- There has been growth in technological capabilities for products and processes.
- Many companies are subcontracting more of their work to suppliers.
Reverse logistics: recycling of materials.
, Metrics give us control by superiors, reporting of data to superiors, communication, learning and
improvement.
Production control has six major challenges:
- Customers that are rarely satisfied
- A supply chain that is large and must be managed
- A product life cycle that is getting shorter
- A vast amount of data
- An emphasis on profit margins that are more squeezed
- An increasing number of alternatives.
Performance measure: must be both qualified and objective and contain at least two parameters.
Performance standards: goals of a company that have target values.
The necessary steps to implementing these two programs:
- Make company goals and objectives
- Define performance
- State the measurement to be used
- Set performance standards
- Educate the participant
- Make sure the program is consistently applied
To get the most profit, these are the main objectives:
- Provide best customer service
- Provide lowest production cost
- Provide lowest inventory investment
- Provide lowest distribution costs
Materials management: the concept of having one department responsible for the flow of materials,
from supplier through production to consumer, thereby minimizing total costs and providing a better
level of customer service.
The objectives of materials management:
- Maximize the use of firm’s resources
- Provide the required level of customer service
Manufacturing planning and control are responsible for the planning and control of the flow of
materials through the manufacturing process. The primary activities are:
- Production planning
- Implementation and control
- Inventory management
