ANALYSIS OF MANUFACTURING AND SERVICE SYSTEMS

1. SIX SIGMA

Six sigma is a new approach to process control based on a set of principles that
enables organizations to improve their quality to near-zero defect levels. These include
understanding customer needs well, appropriate and disciplined use of data and statistical
tools, statistical analysis, and a closer attention to managing and improving business process
using a set of tools. The basic unit of analysis with respect to the quality of any process is the
defect. A defect is an unacceptable state of a product or a service for a customer, arising out
of a business process that produced it. Since the focus of Six sigma quality is primarily
business process, it is equally applicable to both manufacturing and service organization.

Six sigma methodology seeks to provide set of tools and techniques and an
organizational framework to eliminate defects from any business process by ensuring that it
is an "extraordinarily rare event". Six sigma quality control differs from the traditional quality
control on the basis of three features:

 A new metric, defects per million opportunities (DPMO), to predict/access the quality
of a business process.
 A new methodology, "Define-Measure-Analyse-Improve-Control" (DMAIC), to
ensure that very high levels of quality could be assured in the chosen business process
thereby generating favourable outcomes to both the business and the customers. The
DMAIC methodology combines group work, organizational focus towards customers
and process improvement.
 An organizational framework for ensuring that these outcomes are generated on a
sustained basis.

One of the important requirements of a six sigma approach quality control is to be able to
predict the DPMO of a business process by observing the process characteristics and linking
them to customer specifications.

Multinational firms such as Motorola and GE pioneered the use of the Six sigma approach to
quality. In 1988, Motorola Corporation was the winner of the Malcolm Baldrige National
Quality Award. Motorola bases its quality efforts on its six sigma programme
OBJECTIVES OF SIX SIGMA:

 Improve customer satisfaction (Internal and External).

 Improve the quality of product and service.
 To solve problems in a scientific manner.
 Reduce the process cycle time.
 Overall cost saving up to 30%.
 Development of staff skill.
 To develop the bottom line responsibility towards continuous development.
 Eliminating waste or defects.

2. SCOPE AND COMPONENTS OF OPERATIONS MANAGEMENT:

Operations management is a systematic approach to addressing issues in the

transformation process that converts inputs into useful revenue generating outputs.

The scope of operations management is based on the interrelationship of three

aspects.

Structural: Input that will be transformed according to criteria of the desired products,
machinery, equipment, formulas and models.

Functional: Link between the input, planning, implementation, control, and improvements
to obtain optimum performance, so that operations can be run continuously.

Environmental: Those which occur outside the system, such as community, government,
technology, economics, political, social and cultural.

Location of Facilities: Selection of location is a the most important decision in a firm as it

involves a huge amount of investment. Before choosing a location the supply of raw
materials, the weather conditions, transportation facilities, the company's future growth and
expansion are to be considered

Product Design: It is the process of analyzing the customer requirements and giving a proper
study about the design of the product that fulfills the same. It is a process from identifying the
needs to the final creation of a product.
Process Design: It is the grouping and arrangements of machines, equipments, storage and
other facilities used in production process.

Material Handling: The process of holding an treatment of a material from procurement to

final process.

Material Management: Deals with the procurement, control and use of raw material during
production. It should be done in such a way that it should reduce the related cost.

Quality Control: The process of maintaining the intended level of quality in the product.
Prevention of defects and implementation o corrective action.

Maintenance Management: Ensuring all the machines, equipments and tools are in a proper
working condition so that they do not interfere in the continuous production of quality goods.

3. OBJECTIVES OF PROCESS CONTROL CHARTS:

The collective set of tools and techniques used to develop a quality assurance system
when business processes exhibit variations is known as Statistical Process Control (SPC).
In other words they are graphical device of Statistical Process Monitoring (SPM). It was first
designed by Walter A. Shewhart. There are two types of control charts:

 Variable or Measurement chart (X-Chart and R-Chart).

 Attribute chart.

Objectives:

 The purpose of control charts is to allow simple detection of events that are indicative
of actual process change.
 This simple decision can be difficult where the process characteristic is continuously
varying; the control chart provides statistically objective criteria of change.
 It indicates whether the process is under control or not.
 Detects the process variability and also the unusual variations in the process.
 Ensures product quality.
 Provides information about the selection of process and setting of tolerance limits.
 Provides warning in time so that the process can be rectified.
4. INVENTORY MANAGEMENT:

Inventory management is the branch of business management that covers the planning
and control of the inventory. Inventory management is a very important function that
determines the health of the supply chain as well as the impacts the financial health of the
balance sheet. Inventory is always dynamic. Inventory management requires constant and
careful evaluation of external and internal factors and control through planning and review.
Most of the organizations have a separate department or job function called inventory
planners who continuously monitor, control and review inventory and interface with
production, procurement and finance departments.

The progressive states of a material are classified as raw materials, semi-finished goods,
finished goods, and work-in-process (WIP).

Raw Materials: Purchased items that are converted via the manufacturing process into
components and/or products. Raw materials appear in the bottom level of BOM. They are
stored in the warehouse and are non-phantom items.

Semi-finished Goods: Semi-finished goods are items that have been stored uncompleted,
awaiting final operations. They are the items between the top and bottom levels in a
management BOM (rather than engineering BOM) and are non-phantoms. Semi-finished
goods are not sold to the customers.

Finished Goods: A finished good is a product sold as a completed item or repair part, i.e.,
any item subject to a customer order or sales forecast. Finished goods are non-phantoms and
are stored in the warehouse before they are shipped.

Work-In-Process (WIP): Products in various stages of completion throughout the plant,

including all material from raw material that has been released for initial processing up to
completely processed material waiting for inspection and acceptance as finished goods.

Maintenance, Repair, and Operational Supplies (MRO): Items used in support of general
operations and maintenance such as maintenance supplies, spare parts, and consumables used
in the manufacturing process and supporting operations. These items are used in production
but do not become part of the product.
SOURCE:

Operations Management theory and practice - B. Mahadevan.

https://businessjargons.com/operations-management.html

https://www.planettogether.com/blog/12-components-of-operations-management

https://en.wikipedia.org/wiki/Control_chart

http://www.lancer.com.tw/attachments/367_ErpBook(7).pdf

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