What are the characteristics of a manufacturing process? How are manufacturing processes organized and evaluated? 500word response

Below is the chapter and citation.

Jacobs, F.R. & Chase, R.B. (2014). Operations and supply chain management (14th ed). New York, NY: McGraw-Hill

Understand what a manufacturing process is.

In this chapter we consider processes used to make tangible goods. Manufacturing processes are used to make everything that we buy ranging from the apartment building in which we live to the ink pens with which we write. The high-level view of what is required to make something can be divided into three simple steps. The first step is sourcing the parts we need, followed by actually making the item, and then sending the item to the customer. As discussed in Chapter 1, a supply chain view of this may involve a complex series of players where subcontractors feed suppliers, suppliers feed manufacturing plants, manufacturing plants feed warehouses, and finally warehouses feed retailers. Depending on the item being produced, the supply chain can be very long with subcontractors and manufacturing plants spread out over the globe (such as an automobile or computer manufacturer) or short where parts are sourced and the product is made locally (such as a house builder).



Consider Exhibit 7.1, which illustrates the Source step where parts are procured from one or more suppliers, the Make step where manufacturing takes place, and the Deliver step where the product is shipped to the customer. Depending on the strategy of the firm, the capabilities of manufacturing, and the needs of customers, these activities are organized to minimize cost while meeting the competitive priorities necessary to attract customer orders. For example, in the case of consumer products such as televisions or clothes, customers normally want these products “on-demand” for quick delivery from a local department store. As a manufacturer of these products, we build them ahead of time in anticipation of demand and ship them to the retail stores where they are carried in inventory until they are sold. At the other end of the spectrum are custom products, such as military airplanes, that are ordered with very specific uses in mind and that need to be designed and then built to the design. In the case of an airplane, the time needed to respond to a customer order, called the lead time, could easily be years compared to only a few minutes for the television.

Lead time

The time needed to respond to a customer order.

A key concept in manufacturing processes is the customer order decoupling point which determines where inventory is positioned to allow processes or entities in the supply chain to operate independently. For example, if a product is stocked at a retailer, the customer pulls

Customer order decoupling point

Where inventory is positioned in the supply chain.

exhibit 7.1 Positioning Inventory in the Supply Chain



the item from the shelf and the manufacturer never sees a customer order. Inventory acts as a buffer to separate the customer from the manufacturing process. Selection of decoupling points is a strategic decision that determines customer lead times and can greatly impact inventory investment. The closer this point is to the customer, the quicker the customer can be served. Typically, there is a trade-off where quicker response to customer demand comes at the expense of greater inventory investment because finished goods inventory is more expensive than raw material inventory. An item in finished goods inventory typically contains all the raw materials needed to produce the item. So from a cost view it includes the cost of the material plus the cost to fabricate the finished item.

Make-to-stock Assemble-to-order Make-to-order Engineer-to-order

These terms describe how customers are served by a firm.

Positioning of the customer order decoupling point is important to understanding manufacturing environments. Firms that serve customers from finished goods inventory are known as make-to-stock firms. Those that combine a number of preassembled modules to meet a customer’s specifications are called assemble-to-order firms. Those that make the customer’s product from raw materials, parts, and components are make-to-order firms. An engineer-to-order firm will work with the customer to design the product, and then make it from purchased materials, parts, and components. Of course, many firms serve a combination of these environments and a few will have all simultaneously. Depending on the environment and the location of the customer order decoupling point, one would expect inventory concentrated in finished goods, work-in-process (this is inventory in the manufacturing process), manufacturing raw material, or at the supplier as shown in Exhibit 7.1.

Lean manufacturing

To achieve high customer service with minimum levels of inventory investment.

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer. Examples of products produced by these firms include televisions, clothing, and packaged food products. If unlimited inventory were possible and free, the task would be trivial. Unfortunately, that is not the case. Providing more inventory increases costs, so a trade-off between the costs of the inventory and the level of customer service must be made. The trade-off can be improved by better estimates (or knowledge) of customer demand, by more rapid transportation alternatives, by speedier production, and by more flexible manufacturing. Many make-to-stock firms invest in lean manufacturing programs in order to achieve higher service levels for a given inventory investment. Regardless of the trade-offs involved, the focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

In the assemble-to-order environment, a primary task is to define a customer’s order in terms of alternative components and options since it is these components that are carried in inventory. A good example is the way Dell Computer makes desktop computers. The number of combinations that can be made may be nearly infinite (although some might not be feasible). One of the capabilities required for success in the assemble-to-order environment is an engineering design that enables as much flexibility as possible in combining components, options, and modules into finished products. Similar to make-to-stock, many assemble-to-order companies have applied lean manufacturing principles to dramatically decrease the time required to assemble finished goods. By doing so they are delivering customers’ orders so quickly that they appear to be make-to-stock firms from the perspective of the customer.



When assembling-to-order there are significant advantages from moving the customer order decoupling point from finished goods to components. The number of finished products is usually substantially greater than the number of components that are combined to produce the finished product. Consider, for example, a computer for which there are four processor alternatives, three hard disk drive choices, four DVD alternatives, two speaker systems, and four monitors available. If all combinations of these 17 components are valid, they can be combined into a total of 384 different final configurations. This can be calculated as follows:


If Ni is the number of alternatives for component i, the total number of combinations of n components (given all are viable) is:

Total number of combinations=N1×N2×NnOr 384=4×3×4×2×4 for this example.[7.1]

Total number of combinations






















for this example





It is much easier to manage and forecast the demand for 17 components than for 384 computers.

In the make-to-order and engineer-to-order environments the customer order decoupling point could be in either raw materials at the manufacturing site or possibly even with the supplier inventory. Boeing’s process for making commercial aircraft is an example of make-to-order. The need for engineering resources in the engineer-to-order case is somewhat different than make-to-order since engineering determines what materials will be required and what steps will be required in manufacturing. Depending on how similar the products are it might not even be possible to pre-order parts. Rather than inventory, the emphasis in these environments may be more toward managing capacity of critical resources such as engineering and construction crews. Lockheed Martin’s Satellite division uses an engineer-to-order strategy.



Explain how manufacturing processes are organized.

Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. For example, in the case of Toshiba notebook computers, if the volume is very low, we may just have a worker manually assemble each computer by hand. In contrast, if the volume is higher, setting up an assembly line is appropriate.

The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, workcenter, manufacturing cell, assembly line, and continuous process).

Project layout

For large or massive products produced in a specific location, labor, material, and equipment are moved to the product rather than vice versa.

In a project layout, the product (by virtue of its bulk or weight) remains in a fixed location. Manufacturing equipment is moved to the product rather than vice versa. Construction sites (houses and bridges) and movie shooting lots are examples of this format. Items produced with this type of layout are typically managed using the project management techniques described in Chapter 4. Areas on the site will be designated for various purposes, such as material staging, subassembly construction, site access for heavy equipment, and a management area.

In developing a project layout, visualize the product as the hub of a wheel, with materials and equipment arranged concentrically around the production point in the order of use and movement difficulty. Thus, in building commercial aircraft, for example, rivets that are used throughout construction would be placed close to or in the fuselage; heavy engine parts, which must travel to the fuselage only once, would be placed at a more distant location; and cranes would be set up close to the fuselage because of their constant use.


A process with great flexibility to produce a variety of products, typically at lower volume levels.



In a project layout, a high degree of task ordering is common. To the extent that this task ordering, or precedence, determines production stages, a project layout may be developed by arranging materials according to their assembly priority. This procedure would be expected in making a layout for a large machine tool, such as a stamping machine, where manufacturing follows a rigid sequence; assembly is performed from the ground up, with parts being added to the base in almost a building-block fashion.

A workcenter layout, sometimes referred to as a job shop, is where similar equipment or functions


are grouped together, such as all drilling machines in one area and all stamping machines in another. A part being worked on travels, according to the established sequence of operations, from workcenter to workcenter, where the proper machines are located for each operation.



The most common approach to developing this type of layout is to arrange workcenters in a way that optimizes the movement of material. A workcenter sometimes is referred to as a department and is focused on a particular type of operation. Examples include a workcenter for drilling holes, one for performing grinding operations, and a painting area. The workcenters in a low-volume toy factory might consist of shipping and receiving, plastic molding and stamping, metal forming, sewing, and painting. Parts for the toys are fabricated in these workcenters and then sent to the assembly workcenter, where they are put together. In many installations, optimal placement often means placing workcenters with large amounts of interdepartmental traffic adjacent to each other.

Manufacturing cell

Dedicated area where a group of similar products are produced.

A manufacturing cell layout is a dedicated area where products that are similar in processing requirements are produced. These cells are designed to perform a specific set of processes, and the cells are dedicated to a limited range of products. A firm may have many different cells in a production area, each set up to produce a single product or a similar group of products efficiently, but typically at lower volume levels. These cells typically are scheduled to produce “as needed” in response to current customer demand.

Assembly line

An item is produced through a fixed sequence of workstations, designed to achieve a specific production rate.

Manufacturing cells are formed by allocating dissimilar machines to cells that are designed to work on products that have similar shapes and processing requirements. Manufacturing cells are widely used in metal fabricating, computer chip manufacture, and assembly work.



An assembly line is where work processes are arranged according to the progressive steps by which the product is made. These steps are defined so that a specific production rate can be achieved. The path for each part is, in effect, a straight line. Discrete products are made by moving from workstation to workstation at a controlled rate, following the sequence needed to build the product. Examples include the assembly of toys, appliances, and automobiles. These are typically used in high-volume items where the specialized process can be justified.



The assembly line steps are done in areas referred to as “stations,” and typically the stations are linked by some form of material handling device. In addition, usually there is some form of pacing by which the amount of time allowed at each station is managed. Rather than develop the process for designing assembly at this time, we will devote the entire next section of this chapter to the topic of assembly line design since these designs are used so often by manufacturing firms around the world. A continuous or flow process is similar to an assembly line except that the product continuously moves through the process. Often the item being produced by the continuous process is a liquid or chemical that actually “flows” through the system; this is the origin of the term. A gasoline refinery is a good example of a flow process.


exhibit 7.2 Product–Process Matrix: Framework Describing Layout Strategies


A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete. Such structures are usually highly automated and, in effect, constitute one integrated “machine” that may operate 24 hours a day to avoid expensive shutdowns and start-ups. Conversion and processing of undifferentiated materials such as petroleum, chemicals, and drugs are good examples.

Continuous process

A process that converts raw materials into finished product in one contiguous process.

The relationship between layout structures is often depicted on a product–process matrix similar to the one shown in Exhibit 7.2. Two dimensions are shown. The first dimension relates to the volume of a particular product or group of standardized products. Standardization is shown on the vertical axis and refers to variations in the product that is produced. These variations are measured in terms of geometric differences, material differences, and so on. Standardized products are highly similar from a manufacturing processing point of view, whereas low standardized products require different processes.

Product–process matrix

A framework depicting when the different production process types are typically used depending on product volume and how standardized the product is.

Exhibit 7.2 shows the processes approximately on a diagonal. In general, it can be argued that it is desirable to design processes along the diagonal. For example, if we produce nonstandard products at relatively low volumes, workcenters should be used. A highly standardized product (commodity) produced at high volumes should be produced using an assembly line or a continuous process, if possible. As a result of the advanced manufacturing technology available today, we see that some of the layout structures span relatively large areas of the product–process matrix. For example, manufacturing cells can be used for a very wide range of applications, and this has become a popular layout structure that often is employed by manufacturing engineers.



Break-Even Analysis

The choice of which specific equipment to use in a process often can be based on an analysis of cost trade-offs. There is often a trade-off between more and less specialized equipment. Less specialized equipment is referred to as “general-purpose,” meaning that it can be used easily in many different ways if it is set up in the proper way. More specialized equipment, referred to as “special-purpose,” is often available as an alternative to a general-purpose machine. For example, if we need to drill holes in a piece of metal, the general-purpose option may be to use a simple hand drill. An alternative special-purpose drill is a drill press. Given the proper setup, the drill press can drill holes much quicker than the hand drill can. The trade-offs involve the cost of the equipment (the manual drill is inexpensive, and the drill press expensive), the setup time (the manual drill is quick, while the drill press takes some time), and the time per unit (the manual drill is slow, and the drill press quick).


A standard approach to choosing among alternative processes or equipment is break-even analysis. A break-even chart visually presents alternative profits and losses due to the number of units produced or sold. The choice obviously depends on anticipated demand. The method is most suitable when processes and equipment entail a large initial investment and fixed cost, and when variable costs are reasonably proportional to the number of units produced.

EXAMPLE 7.1: Break-Even Analysis

Suppose a manufacturer has identified the following options for obtaining a machined part: It can buy the part at $200 per unit (including materials); it can make the part on a numerically controlled semiautomatic lathe at $75 per unit (including materials); or it can make the part on a machining center at $15 per unit (including materials). There is negligible fixed cost if the item is purchased; a semiautomatic lathe costs $80,000; and a machining center costs $200,000.


To view a tutorial on break-even analysis, visit

The total cost for each option is

Purchase cost=$200×DemandProduceusinglathe cost=$80,000+$75×DemandProduceusingmachiningcenter cost=

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