Manufacturing Domain Overview

For internal use only
Manufacturing Domain Overview
Manufacturing
Manufacturing is a process which involves tools and labor to
produce goods for use or sale. The term may refer to a range of
human activity, from handicraft to high tech, but is most commonly
applied to industrial production, in which raw materials are
transformed into finished goods on a large scale. Such finished
goods may be used for manufacturing other, more complex
products, such as aircraft, household appliances or automobiles, or
sold to wholesalers, who in turn sell them to retailers, who then sell
them to end users the "consumers".
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Overview
A product must fully meet design requirements and specifications.
A product must be manufactured by the most economical methods in order to minimize costs.
Quality must be built into the product at each stage, from design to assembly, rather than relying on
quality testing after the product is made.
In a highly competitive environment, production methods must be sufficiently flexible so as to respond
to changing market demands, types of products, production rates, production quantities, and on-time
delivery to the customer.
New developments in materials, production methods, and computer integration of both technological
and managerial activities in a manufacturing organization must constantly be evaluated with a view to
their timely and economic implementation.
Manufacturing activities must be viewed as a large system, each part of which is interrelated to others.
Such systems can be modeled in order to study the effect of factors such as changes in market
demands, product design, material and various other costs, and production methods on product quality
and cost.
The manufacturing organization must constantly strive for higher productivity, defined as the optimum
use of all its resources: materials, machines, energy, capital, labour and technology. Output per
employee per hour in all phases must be maximized.
History
In its earliest form, manufacturing was usually carried out by a single skilled
artisan with assistants.
Before the Industrial Revolution, most manufacturing occurred in rural areas.
Various Manufacturing Systems
Guild System
Tropicana System
English System Of Manufacturing
American System Of Manufacturing
Soviet Collectivism In Manufacturing
Mass Production
Just In Time Manufacturing
Lean Manufacturing
Agile Manufacturing
Rapid Manufacturing

Manufacturing Process
After engineer has
designed a product and
made sketches, The
manufacturer then gets the
approved part prints.
The manufacturer then

identifies the new parts to
be made.
Since the part is new they
must then identify new tools
they need to make the part.
Next, The manufacturer has
to establish capital needed
to buy the tools
Once they have requested

the needed money they
must attain the capital
spending approvals
While new parts are

being made, the
current parts are also
produced
If it fails the
inspection then the a
new batch of
updated parts are
produced
Next, The initial
sample inspection is
done.
When all the parts

are perfected pre
production pilot is
done to see if the
new part fits with
the current parts
The current parts are

ordered and
received in the
preproduction pilot
as well
The Manufacturer then does an inspection of the pilot unit

After the tools arrive,
small volumes of
parts with the new
tools are produced
This also goes through the necessary iterations

Once they have the product they want; The product gets
approved
Order is placed for

the tools.
The manufacturer can then start MASS PRODUCTION
Manufacturing Methodologies
Job Production
Job manufacture typically involves producing a one-off product for a specific customer. A
construction contract for building a factory or home is a good example.
Batch Production
Batch production typically involves production runs and manufacture of components. A
batch of components is produced in one production run and then the equipment is
prepared for another batch.
Continuous Production
Industries like petroleum refining and steelmaking use continuous processes that run
uninterrupted. There is a high degree of automation and production capacities tend to be
huge.

Quick Response Manufacturing (QRM)
QRM is focused on making the time period between a customers request for a
product and the final delivery of that product as brief as possible.
Cellular Manufacturing
This concept separates the factory floor into different sections (cells). Machines
are placed in a certain order so that materials flow naturally toward the
completion of a product.
Single Minute Exchange of Die (SMED)

Manufacturers are always looking to reduce wasted time, even between
projects. SMED focuses on changing the factory process from working on an
old product to a new product as quickly as possible.

Just In Time (JIT)
The concept of JIT basically suggests that any inventory is waste. JIT
manufacturers buy just enough supplies to keep the process moving and
schedule them to arrive at the factory just in time for them to be used in
production.
Kanban
When supplies are running low, factories can have an automatic request for
new supplies sent to their suppliers. These alerts have traditionally been called
Kanban, and they are now often computerized.
Just In Sequence (JIS)

This is the most extreme example of JIT. Supplies arrive at the factory at the
exact moment they are needed within the manufacturing sequence, which
means production may come to a standstill if the supplies are just a few minutes
late.
Quality
Quality Control
Quality can be improved by inspecting all produced items and rejecting those
which do not pass the quality criteria. However, this can be a costly exercise.
Inspections and rejections both cost money. Statistical quality control can
reduce the cost of inspection. Improving the quality of production processes and
training operators in quality-controlled operations can reduce rejections.
Lean Manufacturing
Lean is a production process that seeks to eliminate anything in the process
that does not produce customer value. If a customer is not willing to pay for a
particular feature, that feature is eliminated if possible. If the customer can be
satisfied with less expensive components, existing high cost components are
replaced.
Quality
TPM
Under TPM - Total Productive Maintenance - the production operators attend to
most of the routine maintenance of the machines. TPM is a proactive measure
aimed at reducing equipment deterioration and the need for dedicated
maintenance. It can lead to lower machine downtimes, i.e. times when
machines are needed but not available as they are under maintenance.
Six Sigma
Six Sigma is a management strategy that results in high quality and lower costs.
The emphasis is on identifying the factors that lead to defects and improving
processes to eliminate these factors. For example, reasons for defects might be
traced to quality of raw materials, and the specifications of the latter might be
changed to minimize the defects. Methods like Statistical Quality Control will
also be in place.
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Six Sigma
Define, Measure, Analyze, Improve, Control (DMAIC)
This Six Sigma methodology is focused on improving the basic manufacturing
processes that are already in motion.
Define, Measure, Analyze, Design, Verify (DMADV)

This alternative methodology is a more anticipatory approach. Based on an
analysis of customer demand, manufacturers plan ahead and try to design ways
to avoid defects in the first place.
Critical to Quality (CTQ) and Quality Function Deployment (QFD)

These two concepts try to pinpoint the elements of a product that are most
important to customers and translate those needs into a manufacturing strategy
that focuses on getting the critical elements exactly right.

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Six Sigma
Suppliers, Inputs, Process, Outputs, Customers (SIPOC)
SIPOC is a diagrammatic tool that allows manufacturers to trace the life cycle of
their products from supplier to customer and identify problem areas.
Taguchi Loss Function

If a manufacturer designs a production plan that will maximize profit and
efficiency, any sudden changes or variations from that plan pose a problem. The
Taguchi Loss Function suggests that production quality decreases as variation
increases.

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Accelerate Production
Machine Flexibility
This concept refers to the capacity of a factorys machines to adapt. Can they
be changed to manufacture different products? Will they allow for the slight
variations in design that customization requires?
Routing Flexibility
This concept is focused on the adaptability of the manufacturing process as a
whole. Does the factory have multiple machines that can complete the same
task? Can they be paired with various other machines to make customized
products?

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Accelerate Production
Computer-aided Design (CAD) and Computer-aided Manufacturing
(CAM)
Computers allow customers to customize products, and they also allow
manufacturers to create those products with agreeable costs. If a factory has
machine and routing flexibility, they can use CAD to design production
processes and CAM to guide parts through those processes with robots and
computer-controlled machines (CCM).
Computer-integrated Manufacturing (CIM)

Maybe the most important element of flexible manufacturing, CIM creates a
network of computers that observe and operate the manufacturing process.
With CIM, computers can monitor every step of production for defects and
change the actions of a machine almost immediately, contributing to flexibility.

14
Which are functional areas supporting Manufacturing?
1. Know your Item

2. Concept of Business Partner
3. Purchase (Purchase to Pay)
4. Sales (Order To Cash)
5. Manufacturing & Shop Floor Control
6. Enterprise Planning
(Plan to
Produce)
7. Warehousing (Receive to Retrieve/Despatch to Deliver)
PURCHASE
1. Purchase Orders
2. Purchase Contracts
3. Purchase Requisitions
4. Purchase Request for Quotations
5. Vendor Ratings
Purchase Order
P.O is a legal document that authorizes suppliers to supply
goods/items
Order Types include:
Standard Orders (Normal P.O)
Collect Orders
Cost Orders
Cost and Collect
Return Orders
Return and Collect
Consignment Orders
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Purchase Contracts
A contract is an agreement for a specified period of time, that
establishes business Partner, total quantities, prices, discounts
agreed upon for an item or group of items
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Purchase Requisitions
Purchase Requisitions provide the ability to submit requests (to buy goods or
services) for approval prior to actual purchase
Once a Requisition receives approval from the appropriate personnel, it can be
converted into a Purchase Quotation or Purchase Order
Purchase Requisition Process

1) The Requestor completes the header, lines etc
2) Submits the requisition
3) Manager/Supervisor then executes the approval process
4) Conversion of the requisition to a quotation or a purchase order
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Purchase Requests for Quotations

The Requests for Quotations (RFQ) functionality allows you to send
out inquiries to suppliers regarding the procurement of goods
The statuses in the RFQ procedure can be

Created (RFQ created and ready to be printed)
Printed
Modified (In case RFQ is modified, it is reprinted and resent)
Returned (Suppliers return the quotation in response)
Processed
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Vendor Rating
When your company conducts business and purchases goods and materials from
multiple suppliers, you can use Vendor Ratings to help make decisions regarding
whom to buy from.
Vendor Ratings track and record predefined criteria to rate suppliers and keep
track of supplier performance, aiding in the selection process.
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SALES
1. Sales Orders & Order Types
2. Sales Invoicing
3. Commissions, Discounts and Rebates
4. Sales Contracts
Sales Orders & Order Types
Consignment Sales order

Consignment sales orders are used specifically to conduct sales transactions for consignment inventory items
One can only sell consignment inventory using an order type specifically designated as a consignment order.
Collect Orders
Collect Orders are also thought of as Over-the-Counter or Cash Sales
These orders are typically used in circumstances where customers pay for and receive goods immediately, such as at a parts counter
in an automotive dealership.
This is immediate sale, which reduces inventory and has payment received at the time of sale, known as a Collect Order
Cost Order
Many organizations bill for things like freight, administrative costs, or handling fees on their customer sales orders. These may also
represent repair or maintenance hours that must be billed to the customer.
Return Order
Another situation that arises in sales order processing, is the handling of returned goods.
Retro-billed
Retro billing is when you re-invoice previously shipped items using a price based on a new contract negotiation
Retro billing can also be performed on an individual sales order that is not related to a contract.
A retro billing sales order has an item quantity of zero and an order amount that indicates the price difference.
Rush Order
Every company deals with rush requests from customers. These requests usually require special terms of payment and delivery.
Back Order
When a shortage of inventory occurs, back orders can be created to allow for additional shipments at a later date. Once these additional
shipments are confirmed, another delivery request will be generated for the back order.

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Sales Invoicing
Collective and Net Invoices

Non-Collective and Net Invoices
Collective and Gross Invoices
Non-Collective and Gross Invoices

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Commissions & Rebates

Commissions - ???
Discounts - ???
Rebates - ???
Reduction, Refund or Return on what has already been paid

Depending on the transaction type used, a rebate invoice consist of A sales invoice with a negative amount.
A credit note.
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Sales Contracts
In the Sales Contracts, the information entered is
mainly related to the Sold-to Business Partner,
Quantity, Price and sales/delivery schedules for
the contract
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Manufacturing & Enterprise Planning

1. Mind your BOM
1. Supply Chain Modeling
2. Routings
2.
Supply Chain Optimization
3. Serialized Items Vs Lots
3.
Aggregation Planning
4. Backflushing
4.
Channels (Customer Focus)
5. Subcontracting
6. Enterprise Planning
Bill of Material (BOM)

Bill of Material is a listing of all components and relevant data (sub-assemblies and raw
materials) that comprise a manufactured item.
The BOM establishes the parent-child relationship between a manufactured item and its
components.
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Single Level BOM
29
Multi Level BOM
CHAIR.XX
SEAT.XX
SEAT
QTY 1
FAB.0004
FABRIC
QTY 0.5
FAB.0001
FOAM
QTY 1
RAW.OOO2
STEEL TUBE
QTY 2.0
FIX.OOO1
ADHESIVE
QTY 0.1
FAB.0004
FABRIC
QTY 0.8
30
PURCHASED
FRAME.XX
FRAME
QTY 2
BACK.XX
BACK
QTY 1
FIX.OOO3
BOLTS
FAB.0001
FOAM
QTY 1
RAW.OOO2
STEEL TUBE
QTY 3.0
RAW.OOO2
STEEL TUBE
FIX.OOO1
ADHESIVE
QTY 0.2
Routings
1.
Determine how to build the main item
2.
Define the required operations required to build the main item.
3.
Define which work centers and which machines are involved with the manufacturing of
the end item.
4.
Indicate the time required to complete each operation.
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Routing
Components of an Operation
Work
Centers
Machines
Tasks
Operation
32
Routing Operations
Operation Number
Step size
Operation
10
Operation
20
Operation
50
Operation
30
Operation
60
Operation
40

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Serialized items concept

A serialized item is a physical occurrence of a standard item
that is given a unique lifetime serial number
Enables you to track the individual item throughout its lifetime
.for example, through the design, production, testing,
installation, and maintenance phases

34
Subcontract Production Orders

Subcontracting is the use of outside business partners to complete specific operations or
services for your production process that you may not be able to cover from a capacity
standpoint or are not capable of executing in house.
Two types of subcontracting can be performed
Unplanned Subcontracting: Operations of a production order are subcontracted in the
Subcontract Operations session. The subcontracting costs are part of the estimated and/or
actual production order costs.
Planned subcontracting: Work centers of the Subcontract Work Center type are attached
to the item routing and include a Subcontracting Rate and task. The expected subcontracting
costs are part of the standard cost price.
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Shop Floor Control

Order Grouping
Create EP order group

Grouped planned orders
Confirm/ transfer per order group
Create SFC order group
Grouped SFC orders
Warehouse
Outbound
and Picking
Execute activities
by order group
(related to SFC
procedure)
ERP
Simplistic Definition ERP - Enterprise Resource Planning. Detailed
Definition a business strategy and set of industry-domain-specific
applications that build customer and shareholder communities value
network system by enabling and optimizing enterprise and interenterprise collaborative operational and financial processes
(Integrating various stakeholders through collaborative approach to
optimize resource utilization)

37
Key Characteristics
Many companies with ERP use e-commerce Seamless integration of all the information flowing through
a company financial and accounting, human resource information, manufacturing, supply chain
information, and customer information.
Packages Enterprise systems are not developed in-house Mapping organizational requirements to the
processes selection of the vendor and Making informed choices about the parameter setting.
Organizations that purchase enterprise systems enter into long-term relationships with vendors for
updating and maintenance. (Organizations no longer control their own destiny).
Best Practices ERP vendors talk to many different businesses and determine the best and most
efficient way of accounting for various transactions and managing different processes. The result is
claimed to be industry best practices.
Some Assembly Required Most companies have great difficulty integrating their enterprise software
with a package of hardware, operating systems, database management systems software, and
telecommunications suited to their specific needs.
Evolving Enterprise Systems are changing rapidly Architecturally: Mainframe, Client/Server, Webenabled, Object-oriented, Componentization Functionally: front-office (i.e. sales management), supply
chain (advanced planning and scheduling), data warehousing, etc.

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ERP Workflow (SAP)

39
PP Workflow

40
MM Workflow

41
Warehousing
1. Concept of a Warehouse
2. Warehouse Order Procedures
3. Cycle Counting
4. Adjustment Of Inventory
5. ABC & SLOW Moving Analysis
6. Inventory Valuation
7. Cross Docking
8. Package Definitions
Warehouse
RAW
MATERIALS
Loading Dock
L-1
(Perishables)
Z-1
(Storage Condition
Refrigerated )
L-2
(Inflammables)
BONDED
TOXICS
Un-Loading Dock
Z-2
Z-3
Warehouse Orders and Procedures

Inventory transactions are processed using warehouse orders
Warehouse orders originate from orders in other modules
Warehouse orders can require different handling procedures, depending on the order origin
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Cycle Counting Orders

Cycle Counts are intended to check the registered inventory with the actual inventory at a
designated moment in time.
The Cycle Counting module enables companies to perform physical inventory checks
based on an item stock point
These counts can be performed on a periodic basis or can be manually forced for individual
items as the need arises.
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Warehouse Adjustment Orders

An Adjustment order is a manually entered order used to increase or decrease the system
inventory level.

46
ABC and Slow-Moving Analysis

Analyzing inventory is useful for deciding how to track items, place items in a warehouse, or
make decisions regarding the inventory levels of items.
Slow-Moving Analysis, or
ABC Analysis methods to accomplish this
47
Inventory Valuation
Inventory is valued either at cost or market value
Inventory value can change with time therefore, the age of inventory is also taken into
account
The cost value of inventory is usually computed on the FIFO, LIFO, or a standard cost basis
to establish the cost of goods sold.
48
Cross-Docking
Cross-docking is the process by which inbound goods are immediately taken from the
receipt location to a staging location for issue, without intermediate storage.
For example, cross docking may be used to fulfill an existing sales order for which no
inventory is available.
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Package Definitions
Package definitions are product-packaging
descriptions used for the storage or movement
of items containing multiple levels of storage
containers.
A package definition specifies how items must
be packed.
The rules established determine the quantity and
configuration in which the item is moved and
stored.
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Package Definitions
51
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The information contained in this presentation is proprietary and confidential. It is for Capgemini internal use only. Copyright 2010 Capgemini. All rights reserved.

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Manufacturing Domain Overview

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The manufacturer then

Once they have requested

While new parts are

When all the parts

The current parts are

The Manufacturer then does an inspection of the pilot unit

This also goes through the necessary iterations

Order is placed for

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Single Minute Exchange of Die (SMED)

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Just In Sequence (JIS)

Define, Measure, Analyze, Design, Verify (DMADV)

Critical to Quality (CTQ) and Quality Function Deployment (QFD)

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Taguchi Loss Function

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Computer-integrated Manufacturing (CIM)

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Which are functional areas supporting Manufacturing?

1. Know your Item

7. Warehousing (Receive to Retrieve/Despatch to Deliver)

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Purchase Requisition Process

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Purchase Requests for Quotations

The statuses in the RFQ procedure can be

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Sales Orders & Order Types

Consignment Sales order

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Collective and Net Invoices

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Commissions & Rebates

Reduction, Refund or Return on what has already been paid

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| Sector, Alliance, Offering

Manufacturing & Enterprise Planning

1. Supply Chain Modeling

Supply Chain Optimization

3. Serialized Items Vs Lots

Channels (Customer Focus)

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Bill of Material (BOM)

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Single Level BOM

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Multi Level BOM

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Determine how to build the main item

Define the required operations required to build the main item.

Indicate the time required to complete each operation.

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| Sector, Alliance, Offering

| Sector, Alliance, Offering