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An Overview:
Managing Uncertainty & Keeping Promises
The planning and control functions required for production and inventory management (PIM) are briefly delineated below. Also included is a description of various production and distribution environments that may be relevant to every manufacturing company's needs. This material is provided to better define the methods used, or planned to be used, by various teams, traditional examples are provided below for team members to review and adapt as needed for their purposes. Many examples may not be oriented to your company products. But a team that reviews and comes to consensus about how a tool or framework can be applied to resolve production or development problems will have gained a lot from the effort!
SUMMARY OF PRODUCTION PLANNING METHODS:
Manufacturing & production enterprises are classified by their product positioning strategy and by their production process. Product positioning strategies are make-to-stock, assemble-to-order, and make-to-order, Production processes are classified as flow shop, job shop, and fixed site. Product positioning strategies and production process design are both influenced by product volume. Products with high volume and standard design tend to be make-to-stock and are usually made in flow shops. Products with low volume and/or high customization tend to be make-to-order and usually are made in job shops or batch flow shops. Most Organizations have some variety in both the product positioning and production process dimension. The most common situation is an organization that fabricates components in a job shop area and assembles finished products in a final assembly area. The organization makes its most popular products to stock and assembles less popular alternatives to order.
There are critical technological choices all companies must make. Your company must lay out a clear plan for where it wants to be in 5 years and look at the space, people, and equipment required to get there. Technology is changing rapidly. Computer assistance is now essential to any fabrication process. These systems must be evaluated after an understanding and agreement is reached about what the company’s needs will be over the next 5 years.
Computer technology is now available in the design of the product, in the design of the production process, in the production scheduling and material planning process, and in the interchange of data with Suppliers and customers. In addition, microprocessors in manufacturing equipment increasingly communicate with a central computer to create a capability for quick programming of many distinct tasks.
The specific actions common to all manufacturers are forecasting, long-range planning to manage plant and major equipment matters, medium-range planning to manage staffing and materials management matters, short-range planning to schedule production activities, and production control activities to ensure that the plans are met. To manage production and Inventory Systems requires a broad range of knowledge. Rapid changes are occurring in the processes used to make market-driven items, and in the procedures used to plan and control their manufacture. Manufacturing management requires constantly learning new techniques. The work is as rewarding and it is challenging when a team, or group of teams, can see a tangible product created and delivered.
PRODUCTION AND INVENTORY MANAGEMENT FUNCTIONS
From a production and inventory management viewpoint, YOUR COMPANY must perform certain necessary planning functions. All companies must forecast demand for their products. All must determine when to increase facility size, how to staff the facilities, when to make or buy items, and how many to make or buy. In the sections that follow, we discuss the planning cycle and introduce the concepts that are used throughout the rest of the text.
Planning
For every action there was a planned intent. The ability to clearly establish a plan the results in cohesive action is an art, not a science. Planning is the first step in the management of any process. When done correctly, it consists of selecting measurable objectives and deciding how to achieve them. Planning is a Prerequisite for action and control. Without plans there is no basis for action and no basis for evaluating the results achieved. Planning not only provides the path for action, it also enables management to evaluate the probability of successfully completing the journey.
Action is the carrying out (Performance) of plans. Control is comparing actual results with desired results and deciding whether to revise objectives or methods of action,
Planning, action, and control are iterative processes that should occur continuously. Initiation of control does not require that plans actually be executed---only that their results be simulated and evaluated. Thus, at times it is difficult to identify an activity as uniquely planning or uniquely control. However, describing planning, action, and control separately leads to a better understanding of these activities.
Length of the Planning Horizon
Plans can be long range, medium range, or short range depending on the time required to complete the action. The time spans of these different ranges depend on the operational environment of the organization. The long-range planning horizon should exceed the time required to acquire new facilities and equipment. This may require 10 years or longer for organizations involved in the extraction process where new mines must be developed. It may be as short as 18 months for the machine shop where facilities and equipment are catalog items,
Medium-range planning is the development of the aggregate production rates and aggregate levels of inventory for product groups within the constraints of a given facility. Expansion of capacity within the medium-range planning period is limited to increasing personnel or shifts, scheduling overtime, acquiring more efficient tooling, subcontracting, and perhaps adding some types of equipment that can be obtained on short notice.
Medium-range planning usually covers a period beginning 1 to 2 months in the future and ending 12 to 18 months in the future. Its exact boundaries depend on the time constraints for changing levels of production in a particular situation. The planning horizon for medium-range planning is usually at least as long as the longest product lead time. In this context, we define lead time as the time from recognizing that an order for material must be placed until that material is present in a finished good. If medium-term planning uses a horizon shorter than this, material planning cannot properly be performed.
There is no precise definition for the length of the short-term planning horizon. Although detailed schedules and assignments of people and machines to tasks usually do not occur until well within the short-range period, the development of the production schedule frequently bridges the medium- and short-range planning periods. Planning is a continuous activity, and refinement of medium-range forecasts and plans to the detail required in preparing the first draft of a short-range version of the production schedule may take place gradually over a number of weeks.
Some interactions of PIM activities frequently take place in more than one time frame. For example, resource requirements planning for facilities may be performed years in advance of production, while some equipment purchases can be initiated a few months before needed. In addition, the master production schedule frequently covers both the medium-range and short-range planning periods. A brief overview of these activities is presented here before we examine them in detail in subsequent chapters.
Long-Range Planning
Long-range planning activities include business forecasting, product and sales planning, production planning, resource requirements planning, and financial planning. These activities are interdependent; we must establish that each is feasible and that all are compatible.
Business Forecasting: Business forecasting evaluates political, economic, demographic, technological, and competitive factors that will affect the demand for a firm's products. Top management is responsible for this activity, It is not unusual to have a long-range planning task force reporting directly to the chief executive officer and also to employ external forecasting consultants. Business forecasts are aggregated into large product families.
Product and Sales Planning: Product and sales planning refers to decisions concerning the product lines offered and the markets served (including the target demographic and geographic areas). Product line and sales planning decisions are explicit commitments to an organizational direction. It is usually difficult in the short run to change them. The wisdom of marketing decisions substantially influences organizational growth and prosperity. The business forecast must be desegregated into product groups appropriate to production planning.
Production Planning: Production planning uses the forecast from product and sales planning to plan the aggregate rates of production. In production planning, outputs are specified in the broadest terms possible: tons, barrels, yards, dollars, or standard hours of production. The specificity of product line required at this level depends on the equipment required to produce it. For example, automotive engine blocks usually are machined on a specially designed high-speed line. A line built for four-cylinder engines ordinarily cannot be used to produce six-cylinder engines. Thus, the production plan must separate four- and six-cylinder engine requirements to estimate facility requirements. Production smoothing to compensate for varying seasonal demand rates is planned in this time frame.
The production plan establishes customer service level goals, target inventory levels, size of the backlog, production rates, size of the work force, and plans for overtime and subcontracting. The production plan can't be a wish list; it must be within capacity constraints.
The production plan spans the long- and medium-range planning horizons; it serves as a basis for medium-range planning. Some Organizations refine the plan gradually until at some point it is more of a master production schedule than a production plan.
Resource Requirements Planning: Long-range planning is a complex matter. Product, sales, and production planning should interact with resource requirements planning. Decisions concerning products, sales, and output levels should be consistent with planning for facility, equipment, and human resources.
Financial Planning. Product, sales, and production plans frequently require additional resources that in turn require financing. Normal operations require working capital, and sales generate income. The financial capability of the organization to carry out the long-range plans should be verified. After the availability of the required resources is assured, a commitment can be made to the production plan. Integrated facilities, materials, and financial planning is discussed in other sections of this manual.
Medium-Range Planning
The sections on Master Scheduling listed elsewhere in this manual examine the problems of medium-range planning and the techniques available to deal with them. An Overview of medium-range planning and its constituent activities of distribution requirements planning, demand management, master production scheduling, rough cut capacity planning, material requirements planning, and capacity requirements planning are presented in the following paragraphs.
Distribution Requirements Planning (DRP): The DRP is the time-phased replenishment needs of branch warehouses summed by period. These requirements are based on the difference between customer demand and the on-hand and in-transit inventory. In a branch warehouse environment the DRP provides a solid link between distribution and production by providing a record of the quantity and timing of likely orders.
Demand Management: The function of demand management is to determine aggregate demand. This determination reflects forecasts and includes customer orders received, branch warehouse orders, inter-production area orders, special promotions, safety stock requirements, service parts, and building inventory for later high volume demand periods. Special promotions are used to shift the timing of some demands from peak demand periods to less busy periods in order to avoid adding production capacity. The outputs of demand management are a summation of demand by time period, grouped by product family.
Master Production Schedule (MPS): The MPS is a time-phased plan of the items and the quantity of each that the organization intends to build. It is a commitment to meet marketing requirements and to use production capacity. The MPS should be approved by purchasing, production, marketing, and top management.
The MPS covers anything from the present to 1 to 18 months or more in the future. It is used as both a short-range and medium-range planning device. The MPS should be consistent with the production plan. It drives the short-range planning system by providing the input to material requirements planning. Master production scheduling is covered in depth in another section.
Rough Cut Capacity Planning (RCCP): Before management approves the production plan or the MPS, it must verify the organization’s ability to carry out the plan. Rough cut capacity planning includes the following:
1. Determining that sufficient working capital will be available to meet the cash flow requirements
2. Verifying that production facilities and equipment have adequate capacity
3. Determining that key vendors have the required capacity and obtaining commitment of that capacity
If sufficient capacity is not available and cannot be obtained within the planning horizon, the MPS must be altered to fall within capacity constraints. RCCP techniques are found in subsequent sections of this manual.
Material Requirements Planning (MRP): Time-phased MRP items listed on the MPS and determines (1) the quantity of all materials required to fabricate those items and (2) the date that and materials arc required.
Time-phased MRP is accomplished by "exploding" the bill of materials and offsetting requirements by the appropriate lead times.
Capacity Requirements Planning (CRP): The time-phased requirements obtained from MRP are used in conjunction with other data to determine the capacity required to produce the items specified in the MRP. These capacity requirements are compared to available capacity. Corrective action is taken if necessary. Corrective actions include adding overtime, rerouting production, and sub-contracting some work.
When available capacity is insufficient despite corrective action, the master scheduler reviews relative priorities and, working with marketing and production, makes the difficult decisions required in revising a schedule.
Revisions in the MPS will require the MRP to be rerun and its output used to verify that capacity requirements are now within constraints, CRP is discussed elsewhere.
Short-Range Planning
Short-range planning and control involve both priorities (i.e., determining and meeting due dates) and capacities. Demand management provides the gross requirements input to the MPS, which drives the short-range planning system. The MPS and MRP provide priority planning. The output of the MPS and MRP must be within capacity constraints as determined by CRP. Capacity control is obtained via input/output controls. Priority control is achieved through production activity and purchasing controls.
Final Assembly Schedule (FAS): The FAS is a statement of the end item configurations that are to be assembled. In an assemble-to-order environment, the FAS frequently is stated in terms of individual customer orders. In an assemble-to-stock environment, it is a commitment to provide a specific quantity of different end product catalogued items.
In some cases the items included on the MPS are the same as those on the FAS. In other cases, the items on the MPS are at a lower level in the bill of materials. This and other aspects of master scheduling are covered in depth elsewhere.
Input/Output Planning and Control: Completion of the MPS, RCCP, MRP, and CRP processes with a schedule of requirements within capacity constraints leads to order release planning. Order release controls the work in process and lead times by controlling the flow of work into the shop. Order release planning principles and techniques are covered elsewhere.
Production Activity Control (PAC). Input/output control, order Sequencing, reporting performance, and determining appropriate corrective action are all part of PAC. The function of order sequencing is to determine that the sequence in which tasks are to be performed is consistent with their relative priority. Sequencing decisions arc executed by order releases and the dispatch list. The dispatch list, which includes jobs in or soon to arrive in a department and their relative priorities, is the term commonly used to identify the report used to transmit priorities to the production unit.
Reports of actual departmental output, which reveal actual capacity and anticipated late completion of specific jobs, provide the feedback that "closes the loop." This enables management to exercise control by taking the necessary corrective action.
Purchase Planning and Control: Planning and controlling the priorities of purchased items are equally important. Some of the approaches may be different from those used for internal production, but the principles are the same, With the growing emphasis on long term relationships with qualified vendors, vendor capacity management is increasingly important.
Just-In-Time Manufacturing: The term Just-in-Time' was introduced in connection with high-volume, repetitive manufacturing. Just-in-Time is an approach to manufacturing that involves eliminating all waste and making the production worker an important part of the decision-making process. Just-in-Time involves not only the production and inventory management function, but many other aspects of a business. Manufacturers that are not high-volume, repetitive manufacturers are finding that the philosophy of continually striving to eliminate waste has much to offer their operations as well.
Total Quality Control and Preventive Maintenance: For Just-in-Time manufacturing to function, machines must not break down at critical times, nor can they produce defective parts. Thus, total quality control and preventive maintenance are prerequisites to Just-in-Time system success.
PRODUCT POSITIONING STRATEGIES
A product positioning strategy refers to the type of inventory an organization chooses to maintain. The product positioning strategy may be any one or a combination of the following:
1. Make finished products to stock (maintain and sell from finished product inventory)
2. Assemble finished products to order (maintain an inventory of components, subassemblies, and options)
3. Custom design and make finished products to order (for computer products this might be OEM projects where little packaging is involved, here the development cycle is the production process referred to below)
The major determinants of the product positioning strategy are the production lead time, the time a customer is willing to wait for product delivery, and the degree of customization desired by the customer. If the time a customer is willing to wait for delivery is less than either development lead time or packaging lead time your company must maintain an inventory of finished goods for immediate purchase (or risk loss of business to competitors who have suitable items already available).
Thus, a challenge for any make-to-stock producer is to determine how to lower production lead time to move to an assemble-to-order or make-to-order strategy. It is not unusual for an organization to have different strategies for different product lines. A company may even have two strategies for one product. For example, if MTL-CD’s have a packing variation, it makes sense to keep some unassembled stock on-hand for special orders with unique requirements. If all CD’s are assembled its almost a given that orders will come in that require tearing down one packaging configuration so the CD can be used in another.
Make-to-Stock: The positioning strategy of make-to-stock emphasizes immediate delivery of good quality reasonably priced, off-the-shelf, standard items. In this environment a customer is not willing to tolerate a delay in receiving the product. Management is required to maintain a stock of finished goods. Often the stock of finished goods held is quite large to increase responsiveness. The challenge is to use up old goods before or just when new product is ready for release.
Assemble-to-Order: Although some products are packaged or finished to order rather than assembled, for convenience, we will refer to this environment as assemble-to-order. The positioning strategy of assemble-to-order is to supply a large variety of high quality, competitively-priced, final products from standard components and subassemblies within a short assembly lead time.
Make- or Engineer-to-Order: The positioning strategy of make-to-order is to provide the technical ability to typically produce specialty products, such as EZ-Drive configured to run on WESTERN DIGITAL Drives. In many situations the final design of the item is part of what is purchased. The final product is usually a combination of standard components and other components custom designed for the customer. Here of course the custom components are specific modified computer programs.
PRODUCTION PROCESS DESIGNS
(WHAT TO CONSIDER WHEN SETTING UP A PROCESS POSITIONING STRATEGY)
There are three traditional designs that are useful in classifying production process environments. These designs are called flow shop production, job shop production, and fixed site production.
Flow Shop: The flow shop is sometimes called a product layout because the product always follows the same sequential steps of production. There are four types of flow:
(1) continuous flow,
(2) dedicated repetitive flow,
(3) mixed-model repetitive flow, and
(4) intermittent or batch flow.
Continuous Flow: Continuous flow usually refers to the production or processing of fluids, wastes, powders, basic metals, and other bulk items. An oil refinery that gradually refines crude oil into various petroleum products or a pipeline for water, oil, or natural gas are examples of continuous flow production and distribution processes.
Dedicated Repetitive Flow: Discrete parts such as shafts and connecting rods and discrete assemblies such as microcomputers may be produced by a repetitive flow process. The term dedicated implies that the production facility produces only one product, including product variations (such as color) that require no setup delay in the assembly or production process.
A dedicated line is selected either when the demand for the item justifies the exclusive use of a line or when the production requirements are sufficiently different from any other item, In the latter case, excess capacity may exist and either the production rate is adjusted to match the demand rate Or the line is periodically idle.
Batch Flow: The batch flow production process is functionally the same as the continuous or the repetitive, except that two or more products are produced in the same facility. Because of long setup times in the batch flow shop, production runs for each product typically last several hours or several days. An example of a continuous batch flow facility is a bottle filling production area that fills bottles with several varieties of liquid. During setup, lines must be cleaned to avoid product contamination from the previous product. Sometimes bottle height changes, requiring adjustment of line or machine height. A batch repetitive flow producer makes discrete parts; changing parts requires a setup. Often the products may differ only in color, but changing colors may require a long setup for painting. Again cloning CD’d or FLOPPY’s is a good example here.
Characteristics of Batch Flow: The following are characteristics of an intermittent or batch flow production process:
1. Equipment tends to be more general purpose, and thus less efficient, than continuous or dedicated repetitive production.
2. Equipment and personnel must be continually scheduled.
3. The equipment is cleaned and adjusted for the required temperature, pressure, and time prior to running a different item.
Mixed-Model Repetitive Flow: Mixed-model repetitive flow processes are also used to produce two or more models. However, the changeover time between models is minimal (frequently zero), and the different models are intermixed on the same line. Hall (1983) describes such a mixed-model line with the following flow sequence, where A, B, C, and 31) represent different models: A-B-C-A-B-C-A-B-A-n, Thus, for every B produced, there would be four As, three Bs, and two Cs produced.
Characteristics of Mixed-Model Repetitive Flow: The following characteristics typify a mixed-model repetitive flow line:
1. The equipment is general purpose in order to facilitate produce of several models.
2. Workers are multifunctional, i.e., capable of performing many different tasks on one tine or of moving to different lines in the same production area.
3. Setup times are very short The ideal setup time is small enough to accommodate run lengths of one unit, switching models after every item.
The line produces at the market rate of sales. Workers are added and subtracted and production tasks are reassigned as needed to support the market rate on all models.
Objectives of Flow Shop Design
Possible objectives of a flow design are as follows:
1. Combine activities requiring one or more of the following: the same special skill, the same tooling or equipment, or the same materials or parts.
2. Meet operation relationship requirements, such as segregating dust-producing activities from activities requiring a clean environment.
3. Limit the number of physically demanding tasks at each work station in a manual line.
4. Provide flexibility to meet changes in output rates. Work stations can be reorganized by changing assignments of activities with minimum difficulty and cost.
5. Minimize the space requirements.
Job Shop
A job shop process is characterized by the organization of similar equipment by function. As jobs flow from work center to work center, a different type of operation is performed in each center. Orders may follow similar or different paths through the production area, suggesting one or several dominant flows, The layout is intended to support a production environment in which there can be a great diversity of flow among products.
The following are salient characteristics of job shop processes:
1. Multipurpose production and materials handling equipment can be adjusted and modified to handle many different products.
2. Many different products are run in lots or batches through the production area, and many lots are usually being processed at a given time. Flow demand per product usually does not justify flow production.
3. The processing of orders requires detailed planning and control due to the variety of flow patterns and the separation of work centers.
4. Control requires detailed job and shop information, including processing sequence, order priority, time requirements of each job, status of jobs in process, work center capacity, and capacity requirements of critical work centers by time period.
5. Work center loads differ greatly; that is, they have different percent-capacity utilization, Critical capacity centers (bottlenecks) caused by relative scarcity of people or machinery must be determined. A change in product mix may cause the bottleneck to shift from one work center to another.
6. Resource availability, including materials, personnel, and tooling, must be coordinated with order planning.
7. The amount of work-in-process material tends to be high relative to that in a flow process due to the queues and long in-process times.
8. Using traditional scheduling techniques, the total time, from the beginning of the first operation to the end of the last, is relatively long compared to total operation time. An order often spends 95 percent or more of its time in the production area waiting to be moved to the next work center or waiting at a work center for processing.
9. Direct labor personnel are usually more highly trained and skilled than those in a flow process operation.
Job shop operations, like intermittent (batch) flow operations, are characterized by batches, However, unlike intermittent flow processes where batches and batch size are determined by setup time constraints and demand volumes, the batch size of job shop processes often is dictated by the size of a specific order, Thus, large and small batches of very similar, or in some cases identical products, arc processed concurrently by the job shop
Large job shop processes have characteristics that are very similar to repetitive flow or intermittent batch flow operations. High setup costs are prorated over larger lots and specialization of labor and equipment are thus permitted. Alternatively, small job shop operations produce anywhere from ten to several hundred units per setup, and consequently they rely on highly flexible labor and lower-cost, flexible, general purpose equipment, A commercial printer is typical of a small job shop. Jobs are often quoted in terms of setup costs and then additional costs per unit, per hundred, or per thousand of production,
Objectives of Job Shop Design
Job shops permit a highly skilled worker, using general purpose equipment, to produce products to exacting specifications from design spec’s or blueprints. A job shop is chosen for:
1. Making prototypes of new products.
2. Making small batches for test marketing or early in the production of a product.
3. Making unique or low-volume products such as machines, tools, and fixtures used to produce other products.
4. Ensuring quality whenever highly skilled labor is required to meet specifications. Examples include the production of mirrors for telescopes and the production of other scientific instruments.
5. Providing the worker with the Opportunity to make all of a part or component. Specialization of labor is efficient, but in some cases is not effective due to worker boredom,
Fixed Site (Project)
The key identifying characteristic of fixed site (project) production is that the materials) tools, and personnel are brought to the location where the product is to be fabricated. This type of process is found in shipbuilding, construction, road building, and the final assembly of large, special-purpose trucks, turbines, aircraft, pressure vessels, and any other items that are difficult to move from work center to work center.
Fixed site production is sometimes used in conjunction with other processes, After the product reaches a certain size, it is often more practical to keep it stationary and move the necessary components to its location.
Characteristics of fixed site production include the following:
1. Direct labor personnel frequently are highly trained, very skillful, and independent, They work from blueprints and general instructions rather than detailed process sheets.
2. Order quantities are small and orders frequently have custom design features.
3. Tooling, personnel, materials, and other resources should be available at the proper time to avoid nonproductive capacity.
The Production Process ContinuumPure production process designs (flow shop, job shop, and fixed site) are rarely found. Most production processes combine two, or sometimes all three, of these designs.
For example, building construction usually is regarded as a fixed site project. The construction of suburban housing units, however, often employs job shop and flow shop techniques. Earthmovers dig cellars, create lakes, and build noise-dissipation berms for all houses in the subdivision, Then paved roads, utility lines, concrete forms for basements, and curbs are sequentially added for each of the homes. Because the houses are produced with the same type of flow as an automobile assembly line such housing construction can be likened to a flow shop process. One difference is that the car is moving on the assembly line, but the house assembly tools and processes are moving sequentially to different fixed sites in the housing development. Thus, housing production combines some elements of a fixed site operation with some elements of a line flow.
Further, consider that some houses are built without cellars, and thus require different concrete forms. This and other design customizations suggest characteristics of a job shop process. Each house must be adjusted for various semi-custom modifications, as in a job shop. To minimize the amount of investment in fixed inventory (in this case, a finished but unsold house), this integrated production process must be closely coordinated with the progress of house sales.
The three pure production processes, when considered in terms of applications, are better represented as a continuum. Examples of a continuous flow might be an oil pipeline, a sugar refinery, or a radio transmission. At the other extreme, a plumbing repair or a bridge construction project are reasonably fixed processes. Between these two relatively pure extremes there are numerous possible adjustments of process design.
One important reason to identify the design of the production process is that each production process type requires specific types of job flow, implying specific layout and scheduling techniques and different management concerns and tasks. In turn, different production processes suggest different product positioning strategies.
Companies can define their exact position within the framework of a matrix, although they are constrained somewhat by the type of product and the state of product development. For example, auto assembly is generally considered to be a repetitive process, but many luxury and sports automobiles are built in job shops-sometimes even in a semi-fixed position. Examples are Rolls Royce, some Volvo models, and the Studebaker Avanti. (Note that these exam-pies are low volume products with high customization, while the Ford Taurus is a high volume product with little customization.)
The flexibility afforded by programmable logic controllers (microprocessors similar to ones that control a microwave oven) are changing the nature of the volume-process choice relationship.
DISTRIBUTION PROCESS DESIGN
In addition to selecting a production process, an organization also must choose distribution outlets and design the field Support system. The distribution system choice affects several inventory and product support issues. In descending order of product support, distribution outlets are turnkey, specialty shops, discount shops, and mail order, Each of the above may receive finished goods from a central or regional warehouse Turnkey and mail-order operations also may obtain finished goods from an assemble-to-order producer
A turnkey operation delivers material to the user, sets it up, and ensures it is working properly, The supplier usually provides a service contract providing on-site maintenance for the user. Examples are computers, large duplicating equipment, and large machinery.
A specialty shop is a retailer of one type of item, such as men, S or women's clothing, Sporting goods, jewelry, and so on. The specialty shop provides advice on selection and Usage of items. Frequently, a specialty shop will customize an item, making the shop the last stage of the production process. The specialty shop may provide service under the product warranty
A discount shop is a retailer carrying a very broad line of products. Prices are lower than in specialty shops, but no advice or customization is provided. if the customer experiences problems with a product, the discount store may exchange the product, but usually warranty service must be arranged through the producer, not the retailer.
For items that are small enough to be mailed or shipped by common carrier, mail order is an increasingly popular alternative. By centralizing the point of contact with the customer, the mail-order house often is able to provide a more knowledgeable sales clerk than is the discount shop. Exchange policies for reputable mail-order vendors are similar to those of discount houses, but the customer who must exchange a defective item encounters the delay and expense of mailing the product back and awaiting replacement.
TECHNOLOGICAL CHOICES: Information Management
Producers constantly seek the product or process characteristics that will give them a competitive edge. They need information on changing production process developments, product technology, information management systems, and product distribution methods. The computer is Playing an increasing role at all levels of production and distribution process design. For example, if the production and distribution process is presented as a system This system must include product design, supplier selection, product fabrication, assembly, inspection, and distribution. The system must also provide for customer contact and for redesign of the product, the production process, and the distribution process based on continuing input from the customer
The computer provides a way to exchange documents with suppliers and customers (electronic data interchange, EDT) and to assist in the design of products (computer aided design, CAD) and of production processes (computer aided process planning, CAPP). The computer can also assist in scheduling and material planning (CAS&MP), in manufacturing (CAM), and in instructing the user in the proper use of the product (CAT). Collectively, these techniques are known as computer integrated manufacturing (CIM).
The ultimate objective of CIM is to design the product on the computer (CAD) and pass the design electronically to a system that designs the production process (CAPP), including arrangements with suppliers (EDT). The process planning system transfers files electronically to the scheduling and materials planning system, which coordinates material production and purchase (CAS&MP). The process planning system may also transfer specific instructions on how to make the part to robots and to computer or direct numerically controlled machines (CAM). Contact with distributors, like that with vendors, is electronic (EDT). An emerging trend is the inclusion of computer aided instruction (CAT) on the use of the product. This trend is expected to grow exponentially with the introduction of interactive compact disk technology, permitting the mixing of text, images, and sound on a compact disk that can be played on a CD player.
The realization of CIM is not straightforward, Computer aided design, computerized scheduling and material control packages, computer controlled machines and robots, and computer aided instruction all arose independently. Often these technologies exist on machines that do not share a common file format for data or for communication. CAD was developed on dedicated CAD work stations. Computerized scheduling is most frequently performed on production area or departmental minicomputers. Computerized equipment usually has an on-board microprocessor, which may not have been designed for communication with a larger computer. Computer aided instruction was developed for education and is only now developing popularity as a means of customer service. Finally, the company's accounts payable and receivable records may well be on a mainframe computer at a central location far removed from the production facility. Therefore, a company must decide which of these technologies, if any, is appropriate for the company.
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