Production and Supply Chain Management in Manufacturing
**Production Function**
The production function is the process of transforming or manufacturing goods, services, or products within a company. It aims at organizing and controlling the operations that transform production factors into products, striving for maximum economic efficiency.
Production Factors, Products, and the Process of Production Management
- Goal Management: Planning, programming, and control.
- Certain Factors:
- Production capacity: The maximum production output achievable.
- Product demand: The quantity of product the company can sell.
- Productive system design: The structure of integrated processes and the way they produce.
- Economic environment: External situations related to the company.
Production Planning
Efficiency criteria are used because the production system should achieve maximum product output at minimum cost.
Production Planning System
- Plan Agencies: Generic forecasts about business objectives and plans for productive capacity and investment necessary for production.
- Sales Forecasting: The relationship of sales to production potential.
- Master Production Plan: Structure of material and labor costs in relation to the company.
- Production Program: Determining the production works in the short term.
- Operational Control: Regulation of production, adapting to changes.
- Control: Monitoring of production and economic study of production costs.
The Materials Requirements Planning (MRP) System
- Production Program: What happens and when.
- Bill of Materials (BOMs): Component materials that form the product.
- Inventory Availability: Materials in storage.
- Pending Purchase Orders: Orders placed with providers that have not yet arrived.
- Deadlines: Time to get the material.
Logistics
Logistics is an integral activity within the company that manages the planning and control of material flows and their storage efficiently and effectively, with the ultimate goal of satisfying customer needs.
Quality in the Company
- Defined by the set of features and technical specifications that define a product.
- Reengineering: The process of adapting production processes to reach the desired level of quality and improve competitiveness.
- Quality Management: Controlling product quality through inspection techniques, process control, and integral quality management.
- Quality Certification: Officially recognized governing bodies determine the conditions that a company’s quality system must meet to be recognized.
**Supply Function**
The supply function consists of the purchase and storage of materials needed for the company’s activity. Inventory management determines the amount of stock that must be maintained.
Provisioning Cycle
The provisioning cycle is the period that elapses from the time of purchase until the sale of the product. Company production consists of buying, storage, production, storage, and sale.
Stocks
Stocks are materials that a company has deposited in its warehouses that fulfill specific functions within supply management.
- Raw materials
- Semi-finished products
- Work-in-progress products
- Finished goods
- Other commercial supplies
- Byproducts: Recoverable waste materials
Stockout: Insufficient stock to make a sale or continue production.
Costs of Existence
These are the costs the company incurs to maintain stocks in stores. They should generally be minimized.
- Cost of order: Costs generated by placing orders.
- Inventory maintenance costs: Costs incurred to maintain a certain inventory volume.
- Stockout costs: Costs incurred when running out of stock.
Inventory Management
Inventory management enables the company to organize the store and determine the level of stocks, fulfilling two objectives:
- Efficiency: Having the necessary stocks for the company to develop its economic activity.
- Efficiency: Minimizing the overall cost of stocks, contributing to the company’s overall objective of maximizing profits.
Control and Inventory Management
Determines the level of stocks in the store, taking into account various indicators:
- Maximum stock: The greatest quantity of a material that can be held, considering its cost.
- Minimum stock or safety stock: The smallest quantity to prevent stockouts.
- Order point: The stock level at which an order must be placed with the supplier.
Just-In-Time System
The Just-In-Time (JIT) system is an integrated production and supply management approach developed in Japan. It avoids manufacturing products that are not needed. Its goal is to reduce inventory and link it to the immediate satisfaction of customer orders or manufacturing orders.
Formulas
Q = √(2SD / Tg)
g = 360 / N
N = D / Q
PC = D/360 * Lead time
Order point = r
r = s%
s% = D * 2%
1Q Stock
3 PC security risk area
Weather