Classification of Manufacturing /

Operation System
 Manufacturing

• Manufacturing is the use of machines, tools and labour to make

things for use or sale.
• The term may refer to a range of human activity, from handicraft to
hi-tech, but is most commonly applied to industrial production, in
which raw materials are transformed into finished goods on a large
scale
Examples:
o Godrej
o Mahindra & Mahindra
o L&T
o Tata Steel
o ACC Cement

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 Manufacturing Systems

1. Craft Production
2. Projects
3. Job Production
4. Batch Production
5. Mass Production
6. Continuous Production / Flow Production
7. Lean Manufacturing (TPS)
8. Computer Aided Manufacturing (CAM)

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 Craft Production

• Craft production is the process of manufacturing by hand with or

without aid of tools (e.g handicraft, pottery)
• Characteristics
o Unique product
o High Quality
o Ownership
o Variability
o High Cost
o Low Volume
o Delivery schedule

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 Projects

• One of its kind with a defined start and end date (e.g. Bandra-
Worli sea link, Oil rig construction, development of a software)
• Characteristics
o High capital – high variety
o Low volume
o Effective project management & man management skills
o Mix of labour force
o Streamlined processes
o Clear objectives & decision making process to be set

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 Job Production

• Producing one off product for a specific customer (e.g railings of a

specific house, machine installation, Special purpose machines-
SPM)
• Characteristics
o High level of customisation
o Flexibility
o Good Quality
o Higher cost of production
o Skilled Labour
o Slow process

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 Batch Production

• All components are completed at one workstation before they move

to the next work station (e.g Shoe factory, ink making factory,
pharmaceutical ingredients)
• Characteristics
o Reconfiguration, o/p testing & down time
o Use for seasonal items- difficult to forecast demand
o Low initial capital
o Trial run possible
o Traceability

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 Mass / Flow Production

• Production of large amount of standardised products (e.g Food,

Automobile, Chemicals)
• Characteristics
o 20th century – Henry Ford – Ford Motor Company
o Assembly lines – conveyor belts – huge pipes – motors
o Capital & energy intensive
o Automated – fewer labours – faster rate of production
o Low variability – interchangeability – standardisation of spares
o Low skill labour – Huge quantities – Lower per unit cost
o Higher initial cost – lower cost of production
o Low flexibility in design & production process

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 Continuous Production

• Manufacture, produce or process material without interruption (e.g

Oil, Glass, Cement)
• Characteristics
o No idle time – low skilled labour
o Improved work & material flow – higher quantities
o Substantially constant demand
o Product must be standardised – low variety
o Material specification & on time delivery
o Every operation, defined & recorded
o Quality check for o/p at each stage
o Considerable planning & investment

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 Lean Production System / Toyota Production
System
• Getting right things, at right place in right quantity & time –
achieve perfect work flow – minimise waste – be flexible.
• Characteristics
o More value – Less work
o Simplify work to do & understand
o Eliminate waste
Computer Aided Manufacturing (CAM)
• Characteristics
o Skilled Labour
o Low Variability
o High capital investment
o Standardisation
o Less time for operations

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 Factors influencing process selection
decision
• Make to order or Make for stock
• Volume / Variety
• Flexibility
• Market demand
• Environment
• Industry technological growth

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 Make to order v/s Make for stock

• Choice largely depends on the nature of product and its market

o Cheap Ball pens & other stationary items
o FMCG & FMCD
o Aircraft & ship manufacturer
o Supermarket
o Turnkey projects
• Intermediate category – assemble to order
o Fast food outlet
o General purpose machinery

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 Volume – Variety Matrix
Low Variety High

Low
Projects

Job
Volume

Batch Area of application of

productivity techniques

Mass

High
Continuous

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Service – Process Matrix
By
Schemmer
 About the matrix (Service – Process)

• X – Axis: Degree of interaction & customisation

Interaction:
o Degree to which customer can intervene in the process (e.g. restaurant)
o Duration of contact does not effect this feature, it is degree of intervention
(Almost nil in college lectures)

Customisation:
o Degree to which service is tailored specifically to suit the needs of an
individual customer

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 About the matrix (Service – Process) . . contd

• Y Axis: Degree of labour intensity

Ratio of Labour cost to replacement cost of plant & equipment

o Electric utilities = 14.21 (least labour intensive)

o Communication facilities = 5.31
o Amusement Parks = 2.49
o Hospitals = 1.63
o Banking = 1.20
o Hotels = 1.01
o Retail = 0.62
o Business Services = 0.42

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 Service – Process Matrix (Schemmer)

Degree of Interaction & Customisation

Low High

Low
Service Shops
Degree of labour intensity

Service Factories
•Airlines •Hospitals

•Hotels •Auto Repairs

•Resorts

Mass Service Professional Services

•Retailers •Doctors

•Schools •Lawyers

•Commercial Banks •Chartered Accountants

High

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 Labour Intensity

• Low Labour Intensity

o Capital intensive
o Technological advances
o Yield Management (managing demand in peak / off seasons)
o Scheduling delivery service (e.g Octroi naka)

• High Labour Intensity

o Hiring, Training & Welfare issues
o Methods development & control
o Scheduling workforce

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 Interaction & Customisation - issues

• Low interaction & customisation

o Marketing
o Making service appear warm
o Attention to physical surrondings – too clean or too dirty
o Managing fairly rigid hierarchy
o Need for standardised procedures
• High interaction & customisation
o Fighting expenses due to customers whims & fancies
o Reacting to customer intervention in the process
o Gaining employee (High attrition – continuous training)
o Managing Flat Hierarchy

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 Benefit of Schemmer Matrix

• Possibility to move across the diagonal?

o banking and retailing becoming more automated
o restaurants with more standardised menus
o professional service firms to specialise
o pursuit is for controls and reduced costs

• Helps companies assess their competitive stance and means

by which they can provide services

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