During the product or service design stage, the selection of suitable productive systems is crucial. To achieve a high-quality product at a low cost, certain aspects must be considered.
On one hand, we must decide whether production will be stored until sale or if it will only be produced upon request. Additionally, it will be necessary to define whether production will occur in small batches and low volumes, or conversely, if large quantities of product will be produced massively through an assembly line or continuous production line.
Generally, the choice of the type of production process to be used is a strategic decision. Hence, it must be given the utmost importance. Once the type of process to be employed is decided, the machinery and resources become fixed as a basis. Thus, it becomes very costly and difficult to modify them, thus restricting possible future decisions.
To make a decision in the choice of the type of process, the necessary production volume must first be evaluated. We will also need to know how much time is needed to reach that level. Therefore, the analysis of demand and future production capacity should be the first study to be carried out.
A Productive system that delivers customized products must be flexible. That is, it must have the capacity to produce according to consumer specifications. Consequently, the equipment and personnel must have the capabilities to meet the specifications of the components.
The physical facilities should be organized around the nature of the processes. On the other hand, the personnel should be specialized according to the type of generic process. For example, in a machining workshop, one can expect to find departments for milling machines, turning departments, among others.
The flow of the item being processed in this type of Productive system is determined by the individual requirements of each product. Therefore, the routes through the system are variable.
The nature of the demand on the manufacturing system results in intermittent demand for the Productive system facilities. Thus, each component flows intermittently from one process to the next. That is why we say that process-focused Productive systems with intermittent demand must be flexible. This can result in each department and its facilities being used intermittently as needed to meet customer orders.
The physical layout of departments according to their generic type is often referred to as a “job shop.” This is because it is designed to accommodate the needs of individual work orders.
In general, the demand for highly standardized products in high volumes results in continuous utilization of facilities. Additionally, the flow of materials can be continuous, as in the case of petroleum refining. In other cases, it may approximate continuous flow, such as in the manufacturing and assembly of automobiles.
Due to high-volume requirements, the presence of special equipment may be justified. These may be entirely dedicated as part of the Productive system strategy. In this regard, processing for these configurations is entirely tailored to the product.
In general, in these cases, processes are physically arranged in the required sequence. Thus, the entire Productive system is integrated into a single final unit. In this way, we say that continuous productive systems have a product-focused approach.
Under these extreme conditions of high demand for standardized products, the production process is generally integrated. This is why automation is often employed in these cases to achieve standardization and cost reduction. Inventories of standardized products can be an important element in both production and marketing strategies.
As we saw earlier, there are two extremes. On one hand, process-focused production systems (intermittent demand). On the other hand, product-focused systems (continuous demand). In between them, there are countless scenarios. In those cases, systems need to handle multiple low-volume products and multiple relatively high-volume products.
The situation of multiple low-volume products generally requires a process-focused system. This allows for certain economies of scale compared to job shop systems. The latter are not suitable as they are designed to handle custom-made products.
The situation of multiple high-volume products will most likely resort to a mixed production strategy. It should combine both process-focused and product-focused systems. Generally, in manufacturing processes, part manufacturing is often organized on a batch basis. In the case of final assembly, these are usually organized on assembly lines or continuous basis.
Sometimes the manufacturing volume may not be large enough to justify the continuous use of facilities. This is why parts are often produced in economic batches. Here, resulting inventories provide an important production strategy. Additionally, the nature of the assembly process makes it viable to have dedicated assembly lines for certain products.
Next, we will study two cases. The first one is for products that could be produced to be kept in inventory (Stock). The second one is for those that could be produced to fulfill an order.
In principle, the decision to produce only to fulfill orders can be made for several reasons. It’s not always the case when it might be possible to produce to increase inventory. For example, a policy of fulfilling orders offers some flexibility in product design to customers. It also minimizes the risk of carrying inventory, allows for tighter quality control and management, and provides some additional advantages.
On the other hand, a policy of production for inventory can be adopted for equally valid reasons. For example, to offer better service in terms of availability or to reduce variable costs. It can also increase market share by having products readily available when customers urgently need to purchase them.
The choice between a production policy for inventory or for orders does not depend on the adopted system, whether it is a process-focused or product-focused physical system.
For example, in the automotive industry, where a product-focused system is employed, one might assume it would undoubtedly be a producer for inventory. However, this is not the case. Each car is produced to fulfill a specific order from a customer or dealer who has specified the desired options.
Therefore, there are two types of systems: those focused on the product and those focused on the process. Both in combination with two finished product inventory policies: stock or order-based.
In a production-to-order policy, each order must be individually controlled in a much more complex manner. The system must have the capability to respond to each individual customer regarding the progress of an order. It should determine delivery dates and monitor the progress of each order through the plant. For these cases, integrated MRP/MRPII software systems are often used along with commercial channels so that customers can see the status of their orders in real-time.
On the other hand, in production for inventory, planning and control systems can handle all similar items in the same way.
Now, how should an organization position its production system in relation to its markets?
As the product progresses through its life cycle, the production process goes through its own life cycle. It starts with a job shop system (process-focused, order-based). Then the product goes through intermediate stages until it reaches a continuous system (product-focused, inventory-based) when the product is in high demand.
These stages of product and process development are interdependent and support each other. There is a reliance on the appropriate type of production systems based on the volume of the product being sold.
Moreover, the volume of product sold depends, on one hand, on costs, and on the other hand, on part of the competitive position in terms of price-quality. The appropriate use of the production system depends on both factors.
Another factor correlated with the development of the process life cycle is the use of technology at each stage.
When volumes are low, this can be reflected in an extensive variety of product designs. For such cases, process technology should denote the need for flexibility.
In a machine shop, for example, this may require the use of basic tools only. In these cases, automation is not viable for low-volume operations. However, nowadays, computer numerical control (CNC) machines seem to be able to change this situation.
As the product volume increases, the variety on the line decreases. Thus, the volume effect is reinforced, and installations focused on the product are then justified.
The process technology used with facilities dedicated to a product becomes specialized. This means that operations are more integrated and mechanized. Automation and numerically controlled processes are used in this regard.
Thus, a product can mature and virtually transform into a widely used product. In this sense, the variety is further reduced. Additionally, cost becomes the dominant competitive weapon, and production systems are fully integrated. Here, process technology emphasizes high levels of mechanization and automation, including computer control and the use of robots.
In recent years, significant advances have been made in product/process configuration. This will affect the ability to effectively handle flexibility in product design and low-volume demand.
For example, computer-aided design makes it possible to establish specifications for designing custom chips. When these are transferred to manufacturing specifications, a CAD/CAM system is used. This is how custom-designed chips are produced at almost as low a cost as high-volume designs.