Production or ‘Value Creation’ department is entrusted with the responsibilities of creating value desired by the customer. We can include Outsourced suppliers into this value chain since they are extended teams of the organisation.

This is one of the critical department and starts from receiving raw material from store department and ends in producing the finished goods. Each desk in the department adds value to the final product.

Deliverables (i.e. expectations from the Department)

    • Customer
        • Matching of finished goods as per customer’s specifications;
        • Delivery within or before time schedule given to the department;
        • Communication of correct status of orders to customers and other users;
    • Store & Purchase
        • Timely communication of material requirement to store department for replenishment;
        • Communicating quality issues of raw material to store and purchase department for updation in ‘vendor evaluation form’ and raising debit notes on vendors;
    • Production floor
        • Minimum or nil wastage during conversion;
        • Re-engineering the production floor for smooth flow of goods and targeting maximum throughput from the department;
        • Keeping production floor clean;
        • Keeping minimum inventory (WIP) at the production floor and returning the surplus and scraps to the store department;
        • Ensuring accident-free production;
    • Machines
        • Regular maintenance of machines and using 5S practises;
        • Storing unused machines separately to ease the material flow;
    • Personnel
        • Reducing the fatigue of workers’ while engaged in production;
        • Communication of workers’ issues to personnel department and getting them redressed.

Important developments in the Production function

    • Lean Approach suggests structure based upon ‘customer pull’ over ‘customer push’ and ‘single piece flow’ to provide better value to customer.
    • Customer push
        • Traditional system
        • Production based upon planning or projection given by Marketing Dept.
        • Advantage
            • Customer gets delivery of goods immediately
        • Disadvantage
            • Accumulation of inventory → blockage of working capital, incurring carrying cost (cost of maintaining inventory, pilferage, interest, etc.) and holding cost
            • Loss due to obsolescence
            • Longer lead time of production
            • Defects getting detected at the last stage
            • Batch production
    • Customer pull
        • Manufacturing is done as per customer order.
        • Every process is customer of previous process. If the process doesn’t deliver to the next process as per latter’s demand, the process will stop requiring immediate attention of supervisor to rectify the defect.
        • The process moves backward from customer to vendor, which reduces the need for holding large inventory.
        • Facilitates JIT (Just-in-Time) inventory.
    • Single piece flow,
        • Product manufactured as a single piece, i.e. all operations are arranged in sequence or loop shape (say, in U shape) where a single piece moves from various operations till finish.
        • Reduces the need for ‘batch’ manufacturing.
        • Defects are exposed at early stage.

Challenges with Production function

    • Customer
        • Whether customer can choose the features of products and production done accordingly?
        • Can the delivery date be committed to customer in advance and delivery done accordingly?
    • Inventory within the process (WIP) – questions to enquire:
        • Why do we need so much of WIP inventory?
        • Why stock lying before a machine? Whether machine is a bottleneck requiring the same to be resolved?
        • Whether machines and manpower can be re-arranged so that flow is faster and less WIP required?
        • Can the defects be detected on the shop-floor instead of getting detected at final inspection?
        • Can automation tool be used for movement of goods?
        • Whether single piece flow can be achieved? If not, why?
        • Can raw material stock at store department be linked to production to reduce inventory stock with store department?
    • Set-up time
        • Reducing the set-up time for different product → lower the set-up time; more product range can be offered to the customer
    • Quality
        • Customer pays the price for features promised by the organisation
        • Maintaining quality as per customer’s specifications
        • Maximum dispute due to non-delivery of quality products
    • Delivery schedule
        • Delivering the goods before the due date
        • Non-delivery brings extra cost of air-shipment  or customer’s claims or rejection of goods or penalties

Some of the Process Implementation for better Production

Checklists need to be built for fetching the data and identifying exception vis-à-vis benchmarks. Following processes need to be built:

    • Daily reports containing:
        • Hourly production of manufacturing cell vis-à-vis hourly target;
        • Production of each sub-department employee-wise / machine-wise;
        • Order Status (containing Order delivery due date, order quantity, quantity delivered, balance quantity in the descending order from last to latest date);
        • Defect ratio (% of defects vis-à-vis quantity produced);
        • Set-up time spent machine-wise;
        • Bottleneck machines (i.e. machines with demand > capacity resulting in backlogs);
        • Production-line stoppage, if any;
        • Accidents, if any;
        • Overtime amount and reasons.
    • Monthly:
        • Quantity reconciliation (opening WIP, RM received, RM Consumed, closing WIP)
        • Material consumption ratio;
        • WIP inventory on floor;
        • Feedback (suggestions, complaints) for improvement;
        • Lead-time of product vis-à-vis target time.
    • Surprise
        • Comparing actual weight of product vis-à-vis as per material consumption ratio

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