Operational Considerations for Mass Customisation

Transcription

1 Operational Considerations for Mass Customisation 1 Andrew Lyons 1, Dong Li 1, Jorge Hernandez 1, Lucy Everington 1 e Business & Supply Chain Management Research Centre Technology & Innovation. Management School. University of Liverpool (UK) 1. Overview This document introduces the main operational points that need to be addressed for a customised product. These are split into the following groups, order fulfilment and decoupling point, manufacturing process and design scope, strategies for reducing lead time and complexity, basic supply chain structure and planning and control systems 2. Order Fulfilment and Decoupling Point This section considers what order fulfilment strategy is used and where the decoupling point is in each network. The order fulfilment strategies considered are as follows. Make to stock Assemble to order Make to order Design to order 3. Manufacturing Process and Design Scope Montreuil and Poulin (2005) provide some analysis of manufacturing process and design scope for the different mass customisation types. This was based on the diagram below. Figure 1: Manufacturing Process and Design Scope (Montreuil and Poulin 2005.) 1/9

2 This analysis assumes that all the mass customisation types will use line or batch processes, which is unlikely however the majority of them would, making figure 1 a good starting point in this analysis. Figure 1 considers whether the lines used in the manufacturing facilities of the OEM in each network would make single or multiple products, single or multiple models and whether they would work at single or mixed paces. It also considers for the cases where the line does make multiple products/models whether it would have significant set up times. As a general rule the more complex the customisation strategy the further right in the diagram the matching representation of the line will be. 4. Strategies for Reducing Lead time and Complexity Customising a product tends to increase lead time as work needs to be done to the product after the customer has placed their order. Complexity of scheduling and production operations also tends to increase due to the added number of components and assembly combinations. This problem has been considered in numerous papers. The ways of reducing lead time and complexity considered in this analysis are as follows. 1) Use Modular components, this can reduce the overall number of components needed in a product family. 2) Standardise components across product families, this reduces the overall number of components. 3) Inventories of sub assemblies can be kept to reduce lead time as existing parts only need to be assembled to order. 4) Post manufacturing customisation can allow the products to be made to stock and customisation can be done geographically closer to the customer, reducing delivery time. 5) Post sales customisation, this allows the company to make standard products which are still customisable in mass production environments. 6) Offer extreme customisation so that customers will accept longer lead time, when none of the others are suitable or sometimes in addition to the other points offering extreme customisation is a way to persuade customers to wait longer for a product, as they are more likely to accept longer lead times for a product which meets their needs 100%. Considering point one in detail, there are multiple ways that modularity can be used to reduce complexity. Figure 2 illustrates this. 2/9

3 5. Basic Supply Chain Structure Figure 2: Modularity types (Durray et al 2006) The classification system used for this part of the model is taken from Ernst and Kamrad (2000). Their framework considers supply chain structure in the context of modularisation and postponement with modularisation being linked to inbound logistics and postponement to outbound logistics. Figure 3: Framework for supply chain structure, M=manufacturing, A=assembly and P=packing (Ernst and Kamrad, 2000) 3/9

4 Figure 3 shows a diagrammatic representation of each of the structures defined by Ernst and Kamrad. The definitions of these structures are as follows. 1) Rigid structure this represents a typical vertically integrated supply chain. In this case the supply chain exploits economies of scale in production meaning large inventories of parts and finished products are kept. 2) Modularised structure where multiple suppliers are used to produce components/modules which are then assembled at a separate facility. 3) Postponed structure Economies of scale are exploited in the component/module manufacturing and the product is then assembled to meet customer demand. 4) Flexible structure uses many subcontractors for component/module manufacturing. The final product is made to specific customer demand. 6. Planning and Control Systems Different planning and control systems are needed for different manufacturing environment. Numerous studies have looked at the different planning and control systems needed for the different order fulfilment strategies. This section will consider two classification systems that have been generated in this research. The first of these is shown in figure 4. This particular classification focuses on planning and control systems for make to order environments and then contrasts these to those appropriate in a make to stock environment. Figure 4: System Selection Matrix (Stevenson et al 2005) Stevenson et al separates the make to order strategy into two distinct types, Repeat Business Customiser (RBC) and Versatile Manufacturing Companies (VMC.) Repeat business customisers are defined as being companies where there are common parts/modules used across the product family and where there is a possibility of two orders being identical. VMC companies have a higher level of customisation and will tend to make one off products. The planning and control systems considered suitable in this matrix are defined as follows. 1) Kanban is a pull system driven by material/part cards; it controls the flow of material through a set of operations by only releasing materials into the production process 4/9

5 when an order has been placed. This system is usually considered appropriate in pull environments however this classification suggests it is suitable for make to stock which is a push strategy. In this case instead of releasing materials into the production process when a customer order is placed, the materials would be released according to a forecast. 2) Constant Work in Progress (CONWIP) refers to any system maintaining constant the maximum amount of Work in Process (WIP) (Framinan et al 2003.) CONWIP is a similar system to Kanban however it aims to minimise WIP by avoiding WIP stock between operations, the cards stay with the parts for the set of processes rather than just a single process. It is considered to be more robust and flexible than Kanban and other pull systems and suits an environment where companies want to control inventory in a dynamic environment. Again this seems contradictory to a push environment but again could be done to forecast rather than to actual customer orders. 3) Enterprise Resource Planning (ERP) originated from Materials Resource Planning (MRP systems.) MRP is a tool that uses the master production schedule in creating production and purchasing schedules for components. ERP builds on this to consider the needs of the whole supply chain by scheduling supplier needs as well. SAP is an example of an ERP system. If used effectively ERP links all areas of a company, including order management, manufacturing, human resources, financial systems and distribution with external suppliers and customers into a tightly integrated system with shared data and visibility (Chen 2001.) ERP can be used in push or pull systems but may not be needed in the simpler mass production scenarios. 4) Theory of Constraints (TOC) this method concentrates on the constraints of the system for example bottleneck processes and optimising these processes. TOC has 5 basic steps. a. Identify the system constraints. b. Decide how to exploit the systems constraints. c. Subordinate everything else to the above decision. d. Elevate the system constraints. e. If in any of the previous steps a constraint is broken, go back to step 1, do not let inertia become the next constraint (Rahman 1998). TOC theory suggests that buffers of inventory should be kept at the constraints to allow the production process to run efficiently. This suggests that TOC is more suitable for a make to stock or an assemble to order environment than a make to order one. 5) Workload Control (WLC) is a solution that was designed specifically for make to order environments. It works by considering a set of pooled orders before they enter the production process; they are released in an order that reduces congestion in the production process by creating short queues at each process. The orders are monitored so that none stay in the pool over a certain time to keep lead times short. Figure 5 shows a general framework for the WLC concept. 5/9

6 Figure 5: WLC Framework (Breithaupt et al 2002) 6) Paired Cell Overlapping Cards with Authorisation (POLCA) is a hybrid push pull cardbased signalling system emphasizing the reduction of lead times, cutting product costs, increasing DD adherence, and cutting scrap and rework (Stevenson et al 2005.) It is a quick response manufacturing (QRM) method aimed at utilising 70 80% of capacity. It is also associated with lean thinking. The idea of a hybrid push pull system may mean it is suitable for the assemble to order systems as they are often considered a hybrid of make to stock (push) and make to order (pull.) The second classification system that will be considered in this deliverable is shown in table 1. The rows of interest to this study are hi lighted in yellow; these are the level of product customisation and the relevant production control system. 6/9

7 Table 1: Choosing a Production Planning and Control (PPC) system (MacCarthy et al 2000) In addition to the PPC systems considered in the previous framework, this classification considers a spreadsheet, PBC, OPT, MRP and PERT/CPM these are defined as follows. 1) Period Batch Control (PBC) is a cyclical planning system. It operates with fixed cycles or periods during which the parts are produced that are required in a succeeding period in the next stage (Benders and Riezebos 2002.) PBC can be used across the supply chain, which makes it appropriate to the more complex assemble to order or make to order environments. The fixed cycle nature could be disadvantage in the highly customised environments. 2) Optimised Production Technology (OPT) is the methodology TOC was built on, so for this analysis OPT will be discarded. 3) MRP is defined as a set of back scheduling techniques that uses Bill of Materials (BOM) data, inventory data and a master production schedule to calculate net requirements for materials (Koh et al 2002.) MRP was originally designed to work for batch environments but has been used successfully in make to order environments as well. 4) Program Evaluation and Review Technique (PERT)/ Critical Path Method (CPM) are network models designed to reduce cost and lead time. Although these two techniques are often considered together PERT takes into account uncertainties in terms of activity times where as CPM does not. CPM can be considered a special type of PERT. PERT/CPM can be used to consider the supply network allowing them to plan a more complex network. As with the previous framework, Kanbans are suggested for make to stock with the addition of simply using spreadsheets in a predictable simple production environment. 7/9

8 For assemble to order Kanban/PBC or OPT are suggested. TOC which is based on OPT was concluded as a useful technique for assemble to order environments in the previous classification. For make to order MRP is suggested where ERP or WLC were concluded previously, ERP was built on MRP so these are similar systems. Using these classifications, table 2 was constructed to show the PPC techniques that will be considered for the networks by order fulfilment strategy. Due to the differences between the networks that utilise a particular order fulfilment strategy some techniques for a particular order fulfilment strategy will be more appropriate than others. Table 2: PPC classification Make to stock Assemble to order Make to order Design to order ERP ERP CONWIP ERP Kanban Kanban ERP PERT/CPM Spreadsheets PBC POLCA TOC POLCA WLC TOC ACKNOWLEDGEMENT FP7 NMP Project Resilient Multi Plant Networks ( Grant agreement n NMP2 SL Deliverable D3.3: Operational and strategic relationship model REFERENCES Benders J and Riezebos J 2002 Period Batch Control: Classic not outdated Production Planning and Control vol 13 no 6 pp Breithaupt J, Land M and Nyhuis P 2002 The workload control concept: theory and practical extensions of Load Oriented Order Release', Production Planning & Control, 13: 7, Chen J 2001 Planning for ERP systems: analysis and future trend Business Process Management Journal vol 7 issue 5 pp Duray R, Ward P, Milligan G and Berry W 2000 Approaches to mass customisation: configurations and empirical validation Journal of Ops Management Ernst and Kamrad 2000 Evaluation of supply chain structures through modularization and postponement European Journal of Operations Research vol 124 pp Framinan, Jose M., González, Pedro L. and Ruiz Usano, Rafael(2003) 'The CONWIP production controlsystem: review and research issues', Production Planning & Control, 14: Koh, S. C. L., Saad, S. M. and Jones, M. H.(2002) 'Uncertainty under MRP planned manufacture: review and categorization', International Journal of Production Research, 40: 10, /9

9 MacCarthy, Bart L. and Fernandes, Flavio C. F.(2000) 'A multi dimensional classification of production systems for the design and selection of production planning and control systems', Production Planning & Control, 11: 5, Montreuil B and Poulin M 2005 Demand and supply network design scope for personalized manufacturing Production Planning and Control Vol 16 No 5 pp Rahman S 1998 Theory of constraints: a review of its philosophy and its applications International Journal of Operations and Production Management vol 18 no 4 pp Stevenson, M., Hendry, L. C. and Kingsman, B. G. (2005) 'A review of production planning and control: the applicability of key concepts to the make to order industry', International Journal of Production Research, 43: 5, /9