Analysis of Manufacturing Enterprises: An Approach to Leveraging Value Delivery Processes for Competitive Advantage

300 Pages·2000·8.72 MB·English

by  N. Viswanadham (auth.)

ANALYSIS OF
MANUFACTURING ENTERPRISES
An Approach to Leveraging Value Delivery
Processes for Competitive Advantage
THE KLUWER INTERNATIONAL SERIES
ON DISCRETE EVENT DYNAMIC SYSTEMS
Series Editor
Yu-ChiHo
Harvard University
INTRODUCTION TO DISCRETE EVENT SYSTEMS
Christos G. Cassandras, Stephane Lafortune
ISBN: 0-7923-8609-4
OBJECT-ORIENTED COMPUTER SIMULATION OF DISCRETE-EVENT
SYSTEMS
Jerzy Tyszer
ISBN: 0-7923-8506-3
TIMED PETRI NETS: Theory and Application
Jiacun Wang
ISBN: 0-7923-8270-6
GRADIENT ESTIMATION VIA PERTURBATION ANALYSIS
P. Glasserman
ISBN: 0-7923-9095-4
PERTURBATION ANALYSIS OF DISCRETE EVENT DYNAMIC SYSTEMS
Yu-Chi Ho and Xi-Ren Cao
ISBN: 0-7923-9174-8
PETRI NET SYNTHESIS FOR DISCRETE EVENT CONTROL OF
MANUFACTURING SYSTEMS
MengChu Zhou and Frank DiCesare
ISBN: 0-7923-9289-2
MODELING AND CONTROL OF LOGICAL DISCRETE EVENT SYSTEMS
Ratnesh Kumar and Vijay K. Garg
ISBN: 0-7923-9538-7
UNIFORM RANDOM NUMBERS: THEORY AND PRACTICE
Shu Tezuka
ISBN: 0-7923-9572-7
OPTIMIZATION OF STOCHASTIC MODELS: THE INTERFACE
BETWEEN SIMULATION AND OPTIMIZATION
Georg Ch. Pflug
ISBN: 0-7923-9780-0
CONDITIONAL MONTE CARLO: GRADIENT ESTIMATION AND
OPTIMIZATION APPLICATIONS
Michael FU and Jian-Qiang HU
ISBN: 0-7923-9873-4
SUPERVISORY CONTROL OF DISCRETE EVENT SYSTEMS USING PETRI
NETS
John O. Moody and Panos J. Antsaklis
ISBN: 0-7923-8199-8
ANALYSISOF
MANUFACTURING ENTERPRISES
An Approach to Leveraging Value Delivery
Processes for Competitive Advantage
by
N. Viswanadham
Mechanical and Production Engineering
and The Logistics Institute-Asia Pacific
National University of Singapore
SPRINGER SCIENCE+BUSINESS MEDIA, LLC
DISCLAIMER: The author of this book has used his best efforts in preparing this
manuscript. These efforts include the research and development ofthe theories and methods
to determine their usefulness. The author or the publisher makes no warranty of anY kind,
expressed or implied, with regard to the documentation contained in this book.
Library of Congress Cataloging-in-Publication Data
Viswanadham, N. 1943-
Analysis of manufacturing enterprises: an approach to leveraging value delivery
processes for competitive advantage / by N. Viswanadham.
p. cm. --(The Kluwer international series on discrete event dynamic systems)
Includes bibliographical references.
ISBN 978-1-4613-7101-4 ISBN 978-1-4615-4645-0 (eBook)
DOI 10.1007/978-1-4615-4645-0
1. Production management. 1. Title II. Series.
TS155.V561999
658.521--dc21 99-046024
Copyright ® 2000 by Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers, New York in 2000
Softcover reprint of the hardcover 1 st edition 2000
An rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, mechanical, photo
copying, recording, or otherwise, without the prior written permission of the
publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
Contents
List of Figures
Xl
List of Tables xv
Preface XVll
Acknowledgments
XIX
1. INTRODUCTION 1
1. The Manufacturing Enterprise 1
1.1 Traditional vs. Modern Enterprises 3
1.2 Examples 6
2. Motivation and Approach 9
2.1 Part 1: Foundations 11
2.2 Part 2: Specific Business Processes 12
3. Conclusions 14
4. Bibliographic Notes 14
2. ARCHITECTURE OF A MANUFACTURING ENTERPRISE 15
1. History of Manufacturing 17
1.1 Mass Production System 19
1.2 Modern Manufacturing System 19
1.3 Types of Competition 20
2. The Manufacturing Enterprise 23
3. Business Processes 26
3.1 Functional vs. Process-Centric Organization 26
3.2 Definition and Characteristics 27
3.3 Business Process Decomposition 30
3A Process Effectiveness and Efficiency 32
3.5 Process Performance Measures 34
3.6 Customers and Competitors 35
4. Types of Processes 37
5. Some Important Business Processes 38
5.1 New Product Development Process (NPDP) 38
5.2 Production Process 39
vi ANALYSIS OF MANUFACTURING ENTERPRISES
5.3 Supply Chain Process (SCP) 41
5.4 Order-to-Delivery Process (ODP) 43
5.5 Interaction Among Processes 44
6. Characteristics of a Well-Managed Process 46
6.1 Process Ownership 46
6.2 Well-Defined Boundaries 49
6.3 Well-Defined Work Flow 49
6.4 Performance Measurement System 50
6.5 Control of Process Deviations 51
6.6 Process Enablers 52
7. Competitive Strategy and Business Processes 54
7.1 Critical Business Processes 55
8. Core Competencies and Core Capabilities 58
8.1 Resource-Based View of an Enterprise 58
8.2 Core Competencies 60
8.3 Core Capabilities 63
9. Conclusions 65
10. Bibliographic Notes 65
3. ORGANIZATION STRUCTURE 67
1. Introduction 67
1.1 Mechanistic and Organic Organizations 68
2. Types of Organization Structures 70
2.1 Functional Structure 70
2.2 Product Structure 72
2.3 Customer-Based Structure 73
2.4 Geography-Based Structure 73
2.5 Hybrid Structures 74
2.6 Matrix Structure 74
2.7 Process-Based Structure 75
2.8 The Network Organization 79
3. Choosing the Right Structure 83
4. Conclusions 85
5. Bibliographic Notes 85
4. PROCESS PERFORMANCE MEASURES 87
1. Introduction 87
1.1 Functional vs. Process Measures 88
1.2 Process Performance Measures 90
2. Lead Time 92
2.1 Process Redesign and Automation 94
2.2 Methods To Reduce Lead Time 95
2.3 Examples 96
3. Quality 98
3.1 Controlling the Variation 99
3.2 Examples 103
4. Capacity 104
Contents vii
4.1 Examples 105
5. Process Reliability 106
5.1 Dependability 107
6. Cost 108
6.1 Examples 110
7. Asset Utilization 111
8. Flexibility 112
8.1 Coping With Uncertainty 113
8.2 Flexibility in Business Processes 115
9. Conclusions 118
10. Bibliographic Notes 118
5. PROCESS MEASUREMENT AND REDESIGN 119
1. Introduction 119
2. Strategy, Processes, and Measures 122
2.1 Examples 123
3. Measures and Measurements 124
3.1 Measurements at the Work Process Level 125
3.2 Computation of Process-Level Measures 127
4. Balanced Scorecard 129
5. Process Benchmarking 131
5.1 History of Benchmarking 132
5.2 Types of Benchmarking 133
5.3 What to Benchmark? 135
5.4 A Benchmarking Process 136
6. Process Rating and Improvement 137
6.1 Rating Criteria 138
6.2 Process Levels 141
7. Process Redesign 143
7.1 A Process Redesign Example 149
8. Conclusions 151
9. Bibliographic Notes 152
6. THE PRODUCT DEVELOPMENT PROCESS 155
1. Introduction 155
1.1 What is a New Product? 157
2. Product Development Strategies 158
3. The New Product Creation Process 159
3.1 Technology and Resource Development Process 160
3.2 Product Strategy 160
3.3 New Product Development Process 162
3.4 Review Process 163
4. Design of the Stage-Gate System 164
4.1 Three-State Decision Model 165
4.2 Type I and Type II Errors in the Stage-Gate System 167
4.3 Decision Tree for the Stage-Gate System 168
Vlll ANALYSIS OF MANUFACTURING ENTERPRISES
4.4 Why Do New Products Fail? 170
5. Organization Structure 171
6. Performance Measures 172
6.1 Cycle Time 172
6.2 Cycle Time Reduction 174
6.3 Example 6.1: Modeling Software Development 175
6.4 Example 6.2: Modeling a Product Development
Organization 176
7. Benchmarking in the NPDP 179
8. Conclusions 181
9. Bibliographic Notes 181
7. ORDER-TO-DELIVERY PROCESS 183
1. Introduction 183
2. Description of an ODP 186
2.1 Monitoring and Control of the ODP 190
3. Logistics 191
3.1 Information Systems in Logistics 192
3.2 Economic Issues 193
4. Information Sharing in an ODP and Best Practices 195
4.1 Vendor-Managed Inventories 196
4.2 Supplier Scheduling 197
4.3 JIT Purchasing 199
4.4 Interorganizational Information Systems 199
5. Performance Measures of an ODP 203
5.1 Customer Service 203
5.2 ODP Lead Time 206
5.3 ODP Costs 208
5.4 Examples 208
5.5 ODP Flexibility 210
6. Conclusions 210
7. Bibliographic Notes 211
8. SUPPLY CHAIN PROCESS MANAGEMENT 213
1. Introduction 213
2. Supply Chain Fundamentals 215
2.1 Product Flow in a Typical Supply Chain 217
2.2 Virtual Integration 219
2.3 Streamlining the Supply Chain 220
2.4 Competitive Advantage 220
3. Decision Making in the Supply Chain World 221
4. Configuration of the Supply Chain Process 223
4.1 Facility Location 224
5. Effective Supply Chain Management 228
5.1 Production Control Policies 229
5.1.1 Input Control 230
5.2 Interfaces Between Supply Chain Partners 231
Contents IX
5.3 Integrated Product-SCP Design 234
5.4 SCP Types 236
5.5 Postponement 238
5.6 Information Systems 240
6. Performance Measures 241
6.1 Lead Time 242
6.2 Examples 244
6.3 Quality Management 245
6.4 Supply Chain Process Costs 248
6.5 Asset Utilization 251
6.6 Flexibility 251
7. Performance Measurement and Benchmarking 253
7.1 Internal Performance Measurement 253
7.2 Benchmarking Supply Chains 256
8. Organization Structure 258
8.1 Functional Organization Structure 258
8.2 Network Management 259
9. Conclusions 260
10. Bibliographic Notes 261
9. EPILOGUE 263
1. Modeling Manufacturing Enterprises 264
1.1 Performance Measures 265
1.2 Models of Value Delivery Processes 267
1.3 Simulation Models 268
1.4 Analytical Models 269
2. Work Load Modeling 270
3. Case Studies 270
4. Conclusions 271
10.EXERCISES 273
REFERENCES 283
Index 291
List of Figures
1.1 A competitive manufacturing enterprise 3
1.2 IT integrated manufacturing enterprise 5
1.3 Typical work flow through a functional organization 9
2.1 Input-output model of a manufacturing system 17
2.2 Subsystems in a manufacturing enterprise 24
2.3 Functions and business processes in an organization 28
2.4 Business processes in a multiorganizational, multi-
functional enterprise 28
2.5 Business process hierarchy 31
2.6 Example of a interfunctional, interorganizational
business process with interfaces 32
2.7 The new product development process 39
2.8 The production process 40
2.9 The supply chain process 42
2.10 The order-to-delivery process 43
2.11 Cross-organizational, cross-functional work flow in
the NPDP 45
2.12 The interaction between NPDP, SCP and ODP 47
2.13 Strategy, critical business processes, and core capabilities 58
2.14 Core competencies, core business processes, and products 61
3.1 Functional organization structure 70
3.2 Product organization structure 72
3.3 Matrix organization structure 75
3.4 Process management structure 77
3.5 The network organization structure in the garment
industry 80
3.6 Network organization for the hospitality industry 81
4.1 Lean component manufacturer between an unreli-
able supplier and a conventional manufacturer 89