Chapter 6 Operations Technologies
Overview • Introduction • Types of Manufacturing Automation • Automated Production Systems • Software Systems for Automation • Automation in Services • Automation Issues • Deciding Among Automation Alternatives • Wrap-Up: What World-Class Companies Do
Introduction • In the past, automation meant the replacement of human effort with machine effort, to save labor costs. • Today, automation means integrating a full range of advanced information and engineering discoveries into operations processes for strategic purposes. • Today, automation is applied not only for labor cost savings, but also for: • Improved quality • Faster production and delivery of products/services • Increased flexibility
Types of Manufacturing Automation • Machine Attachments • Inexpensive add-ons to machines • Represent oldest technology in automation • Typically perform one or a few simple operations • Examples: • Strip feeders • Quick centering and grasping devices
Types of Manufacturing Automation • Numerically Controlled (N/C) Machines • Have a control system that receives/reads instructions and translates them into machine operations • N/C machines have evolved: • CN/C – computer numerically controlled • DN/C – direct numerically controlled (several machines controlled by a single computer) • Examples: • Weaving machines • Lathes
Types of Manufacturing Automation • Robots • Human-like machines performing production tasks • Brain of these machines is a microcomputer • Have grippers (vacuum, magnetized, adhesive) • Have sensors (tactile, proximity, vision/optical) • Can operate in environments hostile to humans (heat, noise, dust, darkness, skin irritants, …) • Perform precisely and repeatedly without fatigue • Weld, assemble,paint, inspect, transport, …..
Types of Manufacturing Automation • Automated Quality Control Inspection • Take physical dimensions of parts • Compare measurements to standards • Determine if parts conform to specifications • Also check performance (ex. - electronic circuits) • Making 100% inspection economically feasible
Types of Manufacturing Automation • Automatic Identification Systems (AIS) • Sense and input data into computers • Use bar codes, radio frequencies, magnetic stripes, optical character recognition, machine vision • Data read from products, documents, parts, and containers • Used in warehouses, factory floors, retailing, wholesaling • Example – scanner at grocery store checkout
Types of Manufacturing Automation • Automated Process Controls • Use sensors to obtain measures of performance • Compare measures to standards • Might use “expert system” to determine if/what process adjustment is necessary • If necessary, change settings of process • Long used in chemical processing, petroleum refining, paper production
Automated Production Systems • Automation technology becoming more sophisticated • Focus has shifted away from individual machines • More common are whole systems of automated machines linked together for broader purposes
Automated Production Systems • Automated Flow Lines • In-line, automated processing machines linked by automated material transfer • Perform without need for human attendance • Used to produce an entire component • Also called fixed automation or hard automation • Used when product demand is high and stable
Automated Production Systems • Automated Assembly Systems • Automated assembly machines linked by automated material transfer • Operations are component insertion and joining • Produce major assemblies or complete products • Often use standard (lower cost) robots • Product design appropriate for assembly by humans is not fitting for automated assembly
Redesigning Products for Automated Assembly • Reduce the amount of assembly required • Reduce the number of fasteners required • Design components to be automatically delivered and positioned • Design products for layered assembly and vertical insertion of parts • Design parts so that they are self-aligning • Design products into major modules for production • Increase component quality to avoid machine jams
Automated Production Systems • Flexible Manufacturing Systems (FMS) • Kits of materials/parts for a product are loaded on the materials-handling system • Code is entered into computer identifying product and its location in the sequence • Each production machine (without a worker): • Receives settings/instructions from computer • Automatically loads/unloads required tools • Carries out its processing instructions • Product automatically transferred to next machine
Flexible Manufacturing System (FMS) X Pallet Transfer System Tools X Machine 1 X X Workpiece in queue X Tools X Machine 2 X X Pallet with workpiece attached Computer X Tools X X Machine 3 X X Load Unload Worker Parts
Automated Production Systems • Automated Storage & Retrieval Systems (ASRS) • Receive orders for materials from anywhere in operations • Collect the materials from locations in warehouse • Deliver the materials to workstations in operations • Three major elements of ASRS are: • Computers and communication systems • Automated materials handling/delivery systems • Storage and retrieval systems in warehouse
Automated Production Systems • Automated Storage & Retrieval Systems (ASRS) • Main benefits of ASRS are: • Increased storage capacity • Increased system throughput • Reduced labor costs • Improved product quality
Software Systems for Automation • Three “complex” computer-based systems • Computer-Aided Design and Computer-Aided Manufacturing (CAD/CAM) • Computer-Integrated Manufacturing (CIM) • Enterprise Resource Planning (ERP)
Software Systems for Automation • Computer-Aided Design and Computer-Aided Manufacturing (CAD/CAM) • CAD/CAM is a merger of two systems, CAD and CAM (described next) • It is the automation of the transition from product design to manufacturing
Software Systems for Automation • Computer-Aided Design (CAD) • Concerned with the automation of certain phases of product design • Use of computer in interactive engineering drawing and storage of designs • CAD systems are installed to: • Increase designers’ productivity • Improve the quality of designs • Improve product standardization • Improve design documentation • Create a manufacturing database
Software Systems for Automation • Computer-Aided Manufacturing (CAM) • CAM capability progressing slower than CAD • Concerned with automating the planning and control of production: • Plan production • Prepare product routings • Generate N/C programs • Fix the settings of machinery • Prepare production schedules • Control the operation
Software Systems for Automation • Computer-Integrated Manufacturing (CIM) • “All of the firm’s operations related to production are incorporated in an integrated computer system to assist, augment, or automate the operations.” • Covers the chain of events from sales order to product shipment • Output of one activity becomes the input to the next activity
Computer Integrated Manufacturing (CIM) • Incorporates all manufacturing-related functions Process Controls ASRS Automated Assembly GT Systems CAD/CAM MRP II
Software Systems for Automation • Enterprise Resource Planning (ERP) • A complex set of software programs • Integrates most of the business functions in an organization • Accounting • Human resources • Purchasing • Production • Logistics • E-Business • … and more
Software Systems for Automation • Enterprise Resource Planning (ERP) • Five leading ERP software companies are: • SAP ( their “R/3” software is top seller) • Oracle • J.D. Edwards • PeopleSoft • Baan • Can take several years and $millions to implement (Chevron spent $160 million over five years)
Automation in Services Example • Airlines – air traffic control, passenger reservation • Banks – ATMs, computerized bank statements • Gas Stations – automated payment (pay-at-the-pump) • Health Care – MRI system, AGVS for waste disposal • Grocery Store – self-service checkout stations • Real Estate – web based house-for-sale tour video
Automation in Services • Trend developing toward more-standardized services and less customer contact. • Service standardization brings trade-offs: • - Service not custom-designed for each customer • + Price of service reduced, or at least contained • Banking industry is becoming increasingly automated • Service firm can have a manual/automated mix: • Manual - “front room” operations • Automated - “back room” operations
Degree of Customer Contact in Servicesand the Use of Automated Equipment Degree of Customer Contact Manual Operations High Mechanized Operations Automated Operations Low Capital Intensity Low High
Automation Issues • Not all automation projects are successful. • Automation cannot make up for poor management. • Economic analysis cannot justify automation of some operations. • Not technically feasible to automate some operations. • Automation projects may have to wait in small and start-up businesses.
Automation Questions • What level of automation is appropriate? • How would automation affect the flexibility of an operation system? • How can automation projects be justified? • How should technological change be managed? • What are some of the consequences of implementing an automation project?
Building Manufacturing Flexibility • Manufacturing flexibility has become the cornerstone of operations strategy in the 2000s. • The ability to improve/maintain market share because • Customer orders can be delivered soon after receipt of the order • Production can quickly be shifted from product to product • Production capacity can be increased rapidly • New products can be developed and introduced into production quickly and inexpensively
Justifying Automation Projects • Payback period, NPV, IRR, and other conventional approaches alone are inadequate tools on which to base product/process design/redesign decisions • Product/process technology must be seen as a long-term strategic choice • Returns on investment include: • Improved product/service quality • Faster order delivery • Increased flexibility • Reduced production cost • Increased market share
Managing Technological Change • Have a master plan for automation. • Recognize the risks in automating. • Establish a new production technology department • Allow ample time for completion of automation. • Do not try to automate everything at once. • People are the key to making automation successful. • Don’t move too slowly in adopting new technology.
Worker Displacement and Training/ Retraining • One result of automation is the elimination of jobs • Some say that new jobs are created in engineering, manufacturing, programming, selling, and servicing the new-technology products • Many firms realize they cannot afford NOT to train and retrain their current workers • Firms are providing more training than ever before • Still, US firms spend little on training compared to, say, German firms (4% of payroll cost on training)
Deciding Among Automation Alternatives • Economic factors • Effect on market share • Effect on product/service quality • Effect on manufacturing flexibility • Effect on labor relations • Amount of time required for implementation • Effect of implementation on ongoing production • Amount of capital required
Deciding Among Automation Alternatives • Economic Analysis • Economic analysis will always be an important, if not a predominant, factor in deciding among alternatives • Frequently used approaches are: • Break-even analysis • Financial analysis • By using only economic analysis, other important factors are ignored
Example: Valley Hospital • Economic Analysis Valley Hospital is planning to install a new linen retrieval system. Two alternatives being considered are: a continuous vacuum (CV) system and a batch robotic/chute (BR/C) system. The following estimates were prepared: CVBR/C Annual Fixed Costs ($000) $2,690 $975 Average Variable Cost per Ton $1,660 $2,590
Example: Valley Hospital • Economic Analysis At a forecast annual operating level of 2,000 tons of linen, which alternative should be chosen based only on total annual cost? TCCV = 2,690,000 + 1,660(2,000) = $6,010,000 TCBR/C = 975,000 + 2,590(2,000) = $6,155,000 The continuous vacuum (CV) alternative has a lower total annual cost.
Example: Valley Hospital • Economic Analysis The annual volume of linen has to increase or decrease to what level in order for the BR/C alternative to be favored? TCCV = TCBR/C 2,690,000 + 1,660(Q) = 975,000 + 2,590(Q) 830Q = 1,715,000 Q = 1,844.1 tons Annual volume must decrease to 1,844 tons or less.
Example: Security Bank • Economic Analysis Security is considering the installation of an ATM and has estimated the cost of the machine, effects on revenue, savings in taxes from depreciation, and labor savings. The machine is estimated to have an initial cost of $250,000 and an expected life of five years. The after-tax cash inflows for years 1-5 are estimated to be: $87,500; $79,600; $75,300; $71,600; and $69,400. Compute the after-tax payback period.
Example: Security Bank • Economic Analysis Cumulative After-Tax After-Tax YearCash InflowCash Inflow 1 $87,500 $ 87,500 2 79,600 167,100 3 75,300 242,400 4 71,600 314,000 5 69,400 383,400 Payback period = 3 + (250,000 – 242,400)/71,600 = 3.106 years
Deciding Among Automation Alternatives • Rating Scale Approach Automation alternatives are rated using, say, a 5-point scale on a variety of factors such as: • Economic measures • Effect on market share • Effect on product quality • Effect on manufacturing flexibility • Effect on labor relations • Amount of time required for implementation • Effect on ongoing production
Deciding Among Automation Alternatives • Relative-Aggregate-Scores Approach Similar to Rating Scale Approach, but weights are formally assigned to each factor which permits the direct calculation of an overall rating for each alternative.
Example: Brownell Cleaners • Relative-Aggregate-Scores Approach An analyst at Brownell Cleaners is considering two alternatives for a new garment conveyor system, GCS1 and GCS2. He has interviewed several managers in the firm and conducted extensive analysis of the problem. He has collected the information shown on the next slide. Which alternative do you recommend, based on the relative-aggregate-scores approach?
Example: Brownell Cleaners • Relative-Aggregate-Scores Approach Factor Automation FactorsWeightGCS1GCS2 Economic factors Annual savings .30 $21,600 $26,700 Other factors ScoreScore Market share .30 .700 .800 Service quality .15 .600 .700 Labor relations .15 .500 .800 Implementation time .10 .700 .600
Example: Brownell Cleaners • Relative-Aggregate-Scores Approach GCS1GCS2 Factor Wgt. Wgt. Automation FactorsWeightScoreScoreScoreScore Economic factors Annual savings .30 1.000 .300 .809 .243 Other factors Market share .30 .700 .210 .800 .240 Service quality .15 .600 .090 .700 .105 Labor relations .15 .500 .075 .800 .120 Implementation time .10 .700 .070 .600 .060 Total Aggregate Score.745.768 21,600/26,700
Wrap-Up: World-Class Practice • World-Class companies utilize the latest technologies/practices. For example: • Design products to be automation-friendly • Use CAD/CAM for designing products • Convert fixed automation to flexible automation • Move towards smaller batch sizes • Plan for automation • Build teams to develop automated systems • Justify automation based on multiple factors