Production Systems: ILLY CASE Study on Production Process, Layouts, and Performance, Sintesi del corso di Ingegneria industriale

Scarica Production Systems: ILLY CASE Study on Production Process, Layouts, and Performance e più Sintesi del corso in PDF di Ingegneria industriale solo su Docsity!

Terzi,

Industrial tecnologies

Introduction to production systems

1. Preliminary concepts - Process (industrial point of view) = list of activities of various kind. - Industrial technology = the knowledge on which a physical/chemical/organizational process is based. - Production = the process required to produce goods or services destined to a certain market. The production process consists in the transformation performed on inputs (e.g. raw materials, semi-finished goods, energy, information, knowledge, human resources, etc. also known as factors ), based on a defined industrial technology that is implemented through proper equipment, to obtain a certain output. - Production system = a subsystem of the company through which the production process is realized. - Production plant = physical plant where the production system is established and the production process is realized. 2. Production and other industrial processes Generally, production represents the point of intersection of two macro processes that characterize every industrial company: the new product development process (vertical dimension) and logistics & production process (horizontal dimension). The realization of the industrial production process is performed within an industrial production system and it requires the presence of many inputs and resources. Then, the finished product is sold into the market and the revenues are used to sustain the costs and investments while generating profits.

4. Representation of Production Processes The main representation solutions aim at representing the physical aspect and the technological aspects of the process: - The physical aspect corresponds to the view of the process from a static standpoint. It describes the set of physical units of the production system, without considering other elements of technological or managerial nature; o The tool used in this context is the physical layout , which corresponds to a plan drawing of the plant. It can be schematic or detailed. Flows can be added just to understand how they are intertwined. - The technology aspect corresponds to the view of the process from a dynamic standpoint , thus considering the various operations required to realize the process (technology cycle or technology routing). 3 types of diagram can be used: o The Technology Diagram , based on the ASME symbols which is used to represent the flow of materials and the relationships within the production system. It can also be quantitative to represent the amounts of flowing materials.

o The Flow Sheet (or PFD, process Flow Diagram), which represents the different sections of the production system through a schematic drawing of the equipment. ▪ The dimensions and the relative distances between the machines are not respected. The PFD only highlights the flow of materials. In general, it could be a very qualitative description (as in the picture below) or more detailed. o The Block Flow Diagram (BFD): A BFD is a simplified representation of the main phases of a production process. Only critical equipment for the process are represented in a BFD, no other components which will be included in more detailed schemes (e.g. storage tanks, valves, heat exchangers). Subsequently, the flows are represented by directed arrows, normally having the flows from left to right, except for the recirculating flows. ▪ This is, at least, the overall macro-perspective of what is actually occurring within each operation along the production process. ▪ The BFD is an initial representation based on the principle of material flow conservation (mass balances), and it represents the production flows that the production system should be capable to produce, both primary flows, any intermediate flows and scraps or reworks. ▪ This representation it is usually less detailed than the Process Flow Diagram.

The flow can also be continuous or discontinuous according to the presence of temporary buffers.

6. Classification of production systems Industrial production systems can be classified in different ways. 6.1. 3-axis classification This classification considers 3 criteria, drawn by the correspondent orthogonal axes: - How the product is made in the production PROCESS (x axis) - How the production is managed to produce the required VOLUME (y axis) - How the company fulfils the DEMAND from the market, (z axis)

A point in the 3-dimensional space represents a production system, but not every combination makes sense. x-axis. PROCESS - How the product is made Depending on how the production process is realized from a technology point of view, the following cases can be distinguished:

- Process plant (also called basic, primary, or fixed technology cycle production). In this type of production, the components of which the final product is made can no longer be distinguished at process completion: the product cannot be decomposed, as the original components are subjected to non-reversible chemical/physical transformations. Examples are the processes to obtain steel, paper, cement, chemicals, glass, pharmaceutical products, etc. The production system is characterized by a well-defined technology cycle. Therefore, in equivalent terms this production type is called as “fixed technology cycle”. The output of this type of production (called primary) is often the raw material for other production processes (which are therefore called secondary). - Manufacturing plant (or secondary or variable cycle production). In this type of production, two phases are typically present: Parts production and Assembly. o During parts production, materials are subjected to some change in their shape and/or chemical-physical properties. o Thereafter, assembly aims at joining two or more components to obtain the final product. There’s great variety in technology cycles in both parts production and assembly, therefore these processes can also be defined as variable cycle production. How to distinguish a discrete manufacturing product from a process production one? In discrete manufacturing, products can be “assembled and disassembled”, while this is impossible for processed products. y-axis. VOLUME - How production is managed Standing on how volumes in output are realized, production can be classified as: - One of a kind production (or single unit production). In this case, a one of a kind product is made (e.g. building a ship). Because of this singular nature, the variability of the process is very high. Thus, the production resources are managed to produce the exact volumes required in the order. o This production typology corresponds to “Production to order”, both single and repeat; o It doesn’t make sense for “Process Plant”. - Batch Production (or intermittent production). In this case, production intermittently changes from one product to another. To change production, machines and other resources must be prepared during the setup. Since the setup activity requires time, the company is led to produce a production volume higher than the volume immediately required to satisfy future demand without the need to restart production. o This production typology corresponds to “Production to stock” and rarely to “Production to order”;

Engineer-to-Order (ETO): Here, the product is designed and built to customer specifications; this approach is most common for large construction projects and one-off products, such as Formula 1 cars. Purchase-to-Order (PTO): Here the product is already designed, but materials for production are still not in inventory and should be acquired only when an order arrives. Make-to-Order (MTO): Here, the product is based on a standard design and raw materials are in stock, but the production of components is linked to orders placed by the final customer and in accordance with its specifications; this strategy is typical for high-end motor vehicles and aircrafts. Assemble-to-Order (ATO): Here, the product is built to customer specifications from a stock of existing components. This assumes a modular product architecture that allows for the final product to be configured in this way; a typical example for this approach is Dell's approach to customizing its computers. Make-to-Stock (MTS); Here, the product is built against a sales forecast, and sold to the customer from finished goods stock; this approach is common in the grocery and retail sectors. 6.3. Production systems classification based on Industrial Technology (later in detail)

ILLY CASE

PRODUCTION PROCESS

The first step is the coffee beans warehousing, where several trucks every day bring the estimated robusta and arabica beans quantity required for the daily production. The quality of raw material is verified immediately after all the regular impurities removal. Coffee beans are roasted and ground; now coffee is moved in two different lines. In one line the coffee is get into tins that are pressurized in a particular way to preserve the taste. Machineries used technologically unique because have been customized for that purpose. The tin is composed by three elements: a bottom, a wall and a lid. A set of tins are then packaged and put on a pallet. In the other line coffee capsules are produced, composed by four elements: a lid for the water, a body where to put the coffee inside, a filter and a bottom part, where the final coffee comes out. Capsules are packaged in different ways according to customers’ usage. ANALYSIS In the 3-axes classification, the process is divided in a process plant, where coffee beans are irreversibly transformed into edible coffee, and a manufacturing plant where tins and capsules are manufactured. The volume is managed with a continuous production; in fact, the demand is fulfilled with a production to stock, being coffee produced before receiving customers’ orders. In fact, in the Wortmann classification, Illy is a MTS (make to stock), because as said, products are directly sold to customers from finished goods stock.

The volume is “one of a kind production”, because cars are customized with a huge amount of extras that can be added to the car and because are produced only cars that have been ordered. In fact, the company fulfil demand producing on order, that generally are single order. In the Wortmann classification Ferrari is a MTO (make to order), because it makes a forecast of the possible demand and acquire a part of materials needed for such a production.

Introduction to production systems: basics, performances and costs

1. How production systems work: basic components Main components of a production system are: inputs (e.g. raw materials), machines, tools and operators. A production machine could be in different status: - Working; - In setup/change over; - Waiting (idle state) for pieces/operators/interventions; - Blocked for breakdowns; - Under maintenance/repair. An operator could be involved in different tasks: - Working on a machine/system (e.g. manual assembly); - Preparing the production machine (setup), e.g. changing tools, cleaning, loading, etc.; - Doing maintenance and/or repairing machines; - Monitoring and supervising production; - Performing quality checks; - Loading /unloading material Production is handled through work orders. Work orders are planned and scheduled in the production plan, and then “launched” and executed. They are moved in the production system according to the production cycle of the product they are referred to. Even if they are planned, modifications to the production plan could happen (changes in priorities, problems, etc.). A working station is the elementary unit of a production system, which realizes a single process phase of the entire technology cycle. It can be constituted by an operator (manual station), or by a machine (automatic station), or by both (semi-automatic station). Operations in a working station can lead to changes in the physical-chemical, mechanical or assembly structure of material. 2. How production systems work: configurations The working stations of an industrial production system can be arranged or organized in different kinds of configurations , each one corresponding to different types of production systems. The type of organization of the working stations of an industrial plant is closely linked to the production mission of the company. In the figure below, it is schematically shown the set of configuration solutions for both process plants and manufacturing plants. In future, we will often refer to this framework.

3. How production systems work: core performances It’s important to well distinguish between performances and operative conditions: - Performances are the results (measured against a multi-dimensional scale) of the logistic and productive process; - Operative conditions are factors that determine external and internal “context” in which these results are obtained. They influence performances. At this point, it is necessary to introduce the concept of some basic production systems parameters and operational performances: - Production Lead time is defined as the time during which a piece remains inside the production system (this parameter is also called transit time through the system ). The lead- time is the sum of processing time, transport time and waiting time. Waiting time is the time during which a piece is waiting to be processed or assembled and it is linked to another basic parameter, called WIP. o [time] - WIP (work in process) refers to the amount of material, waiting to undergo further processing. WIP grows as more parts wait within the process, and an increase in WIP means more production costs for the company. In fact, a high value of WIP not only involves the need of space for the storage of the corresponding semi-finished materials, but it also involves an unproductive amount of money , which is due to the value stored inside of WIPs. o [quantity of work orders], [time needed to finish the quantity of orders]

• Setup is the time required to prepare a machine, or a line, to produce a new work order. The setup (also called preparation time machine or tooling time) is related to the specific technology involved into the process: for example, it can be related to the need to change tools (e.g. in machining), or to perform washes (e.g. in chemical production), or to adjust, etc. The need to perform the setup activity entails the waste of a productive time. In general, the lead time is lower in process production than in manufacturing production, as process production is normally organized in continuous flow and therefore no setup time of the machines is necessary. o [time]
• Flexibility of a working station (or of a production system) is defined as the ability of the station to change the type of product manufactured quickly and at low costs. In general, production flexibility is in contrast with high setup times. High setup times in production, push towards batch production: this approach reduces the impact of setup time on the unit of production, but also could rise WIP levels.
• Utilization (or saturation) is a parameter that measures the rate of use of a production equipment (or system). It is normally given by the ratio between the effective work hours of a machine and the available working hours of the machine itself. o %
• Availability measures the impact of breakdowns and stoppages on the time when a machine is theoretically available to be used. o %
• Production rate (or production capacity PC or throughput) is the number of products that a production system is able to produce in a time unit o [pieces/time].
• Cycle time is the time period elapsing between the exit of two consecutive workpieces out of a system. It is the inverse of PC. o [time/piece] 3.1. The concept of Lead time The total Lead Time of a work order is the time that is necessary to perform all the activities inside the factory: from the customer order arrival to the moment in which the material is delivered.

products (goods or services) of a greater value than the raw materials or the goods used as the input of the process. Therefore, once offset the costs of used production factors, the objective is to maximize the company profit, because of the sale of the final product. Production factors include everything that contributes to product manufacturing, either in a direct or in an indirect way. You should consider as part of the production factors all the long-term of use assets, such as machinery, equipment, plant services, buildings, and consumer goods, including raw materials and purchase components. Energy (thermal, hydraulic, electric, etc.) is another production factor that, together with labour, can be considered as a noble form of energy. 4.1. Cost of production systems The procurement of production factors involves costs that the company must sustain before or during the operation of the plant, depending on their nature. Costs of a production system can be classified in two main categories: installation costs (or plant costs) and operational costs. Additional components of industrial cost analysis are:

• depreciation and amortization , which do not reflect a real output of money, but which are relevant because they impact the balance sheet of the company and consequently taxes to pay;
• inefficiency costs , which do not correspond to an actual output of money, but to the loss of income resulting due to the inefficient operation of the plant. Typical inefficiency costs are: overtime work costs, subcontractors’ costs, stock-out costs, stock holding costs, setup costs. To be defined as relevant for the design of a production system, a cost should be:
• future (past is already “sunk”);
• avoidable (if we do not follow a certain plan, we do not sustain that cost);
• differential (with respect to other alternative designs / plans) 4.1.1. Installation costs Installation costs can be defined as all the expenses that the company sustains on a plant to enable production. Installation costs must be estimated in the design phase for evaluating the affordability and return of the related investment. To start an industrial activity, it is necessary to have adequate financial resources (i.e. the capital) to be invested in all production factors that are necessary for creating the production capacity. With this respect, a distinction between Fixed Capital and Operational Capital can be done. Fixed Capital (CAPEX) It is required to finance the following activities:
• Feasibility study (preliminary economic analysis of the project);
• Development of the project;
• Acquisition of the ground;
• Building construction;
• Installation of plant services;
• Acquisition and installation of machinery and equipment;
• Intangible cost of knowledge assets (know-how, patent acquisition, payment of royalties);
• Interest payable on any mortgages or loans for investment.

Operational Capital (OPEX) Operational Capital refers to the set of non-durable production assets and financial payable to start production. It normally includes the following costs:

• Inventories of finished products and raw materials;
• Account receivable (deferred payment, typically 30-60 days);
• Cash. 4.1.2. Operational costs Operational costs (or operating Costs) are all costs sustained in a given period of time (typically one year), for the operation of the plant. The operating costs are composed of three different categories:
• Variable operating costs : which include all costs of operation that depend on the volume of production. Examples of variable costs are: o Raw materials; o Components; o Energy; o Commissions due to the sellers; o Transportation.
• Fixed operating costs are independent of the production volume, and shall include all those expenses that remain the same independently from the production level. The most significant fixed costs of this category are: o overhead (insurance, communication, building conditioning, etc.); o expenditure related to technical and administrative staff; o rents; o depreciation. Fixed costs incur period to period regardless of the level of the production activity (even with no production at all).
• Semi-variable operating costs are related not only to the volume of production, but also have a fixed part, independent of the volume of production. They are generally related to maintenance costs and labour (the evaluation of workers cost as fixed or semi-variable depends on the type of employment contract). 4.2. Useful Life of an Industrial Plant The cost analysis conducted so far has mainly focused on the evaluation of business costs by reference to a short-term time horizon (typically one year), with the assumption of having a given configuration of the production system with a well-defined type of plant and the inputs required for the realization of the final product. In this case, the main decision lever is represented by the choice of the annual production management solution that allows achieving the maximum profit margin. However, it is equally important for an industrial company to maintain and improve its level of competitiveness over time, especially in those areas where the intensity of competition, the quality of the product and the dynamics of the market are decisive strategic factors. These companies therefore need to adequately update their production facilities. Before deepening the