Do technology and manufacturing strategy links enhance operational performance? Empirical research in the auto supplier sector

Although much of the literature on manufacturing strategy (MS) and technology studies the implementation and impact of these manufacturing programs in isolation, this paper goes further by assessing the joint implementation and effect of these two manufacturing programs on performance, even when some contextual factors are present. Thus, this paper investigates how plants from the auto supplier sector make use of some operations practices from manufacturing strategy (MS) and from both product and process technology, by testing the effectiveness of both sets of practices, with the ultimate goal of enhancing operational performance. The results suggest that there are only very minor differences between high and standard performers on the aggregated level for technology practices, which may be the reason why technology does not result in significant performance differences between the two plant types. On the other hand, on the aggregated levels, there are somewhat greater differences for MS practices than for technology in both plant types, leading to larger differences in performance. While this study provides a foundation for examining MS, technology and context within a single framework, it is only through further research that a full understanding of the relationship between them will be obtained.     

Application of discrete event simulation to the activity based costing of manufacturing systems

In the last two decades traditional cost accounting practices have been unable to respond to the changing information needs of manufacturing management. Activity Based Costing (ABC) is a method which can solve many of the limitations of traditional cost systems. This method of accounting involves the breaking down of the individual activities and costing of the amount of time spent on each step of the manufacture of a product. This paper illustrates how Discrete Event Simulation may be used to evaluate the ABC of a manufacturing system. A visual interactive simulation software WITNESS is used to model a semi-automated Printed Circuit Board (PCB) assembly line. The PCB assembly line case study demonstrates how ABC can be applied to a manufacturing system using simulation modelling techniques. The paper also discusses further applications of ABC in the manufacturing environment and includes a case study on the operational quality cost.     

Optimal safety stock levels of subassemblies and manufacturing components

In order to control the time to market and manufacturing costs, companies produce and purchase many parts and components before receiving customer orders. Consequently, demand forecasting is a critical decision process. Using modular product design and super bills of materials are two effective strategies for developing a reliable demand forecasting process. They reduce the probability of stockouts in diversified production contexts. Furthermore, managing and controlling safety stocks for pre-assembled modules provide an effective solution to the problem of minimizing the effects of forecast errors. This paper develops, evaluates, and applies innovative cost-based analytical models so that the optimal safety stock of modular subassemblies and components in assembly to order and manufacturing to order systems, respectively, can be rapidly quantified. The implementation of the proposed models in two industrial case applications demonstrates that they significantly reduce the safety stock inventory levels and the global logistical cost.     

"Managing" Learning by Doing: An Empirical Study in Semiconductor Manufacturing

This article examines the contributions of human resource and organizational practices to the development and supply chain management interface. It addresses this issue in the context of the semiconductor industry by highlighting the importance of these practices for learning‐based improvement in manufacturing. One of the most important factors for competitiveness in the semiconductor industry is the ability to manufacture new process technologies with high yields and low cycle times. The more effective management of new process technologies within the manufacturing facility aids firms in managing production costs, volumes, and inventories. Efficient management of new process development and introduction translates into enhanced internal supply chain management performance by improving the design of internal workflows, manufacturing performance, and the acquisition and installation of new manufacturing processes. Because much of the knowledge that underpins semiconductor manufacturing is idiosyncratic, however, firm‐level differences in human resource and organizational practices are likely to have consequences for performance. The article derives learning curve models of the rate of improvement in manufacturing yield (i.e., the rate of learning) and cycle time (i.e., the speed of production) following the introduction of a new process technology in a manufacturing facility. It then tests the influence of the use by semiconductor manufacturers of teams for problem solving and intrafirm knowledge transfer, the level of internal adoption of information technology (IT), and more extensive and effective workflow and production scheduling systems on manufacturing performance. It finds that the manners in which semiconductor manufacturers allocate engineering resources to problem‐solving activities, utilize information technology in the manufacturing facility, schedule production, and control the “shop floor” influence the levels and rates of improvement in both manufacturing performance measures. The article makes several contributions to the literature on product and process development and, accordingly, to research on the product development/supply chain interface. In particular, the model of organizational‐based learning provides a better understanding of the determinants of learning‐based performance improvement. In particular, better manufacturing performance results not strictly from greater cumulative volume but also from the actions of managers that affect the organization of establishment‐level problem‐solving activities and information exchange. The article also demonstrates that human resource and organizational practices in both the development and the adoption of new process technologies improve manufacturing performance by accelerating new product introduction, improving workflow, and enhancing the efficiency of manufacturing processes.     

Diffusion and Performance of Modular Production in the U.S. Apparel Industry

This article examines the determinants of the diffusion of team production systems (modular assembly) and the impact of these systems on firm performance relative to traditional assembly systems in the apparel industry. The article draws on an extensive survey providing detailed information on a wide range of manufacturing practices and retail relationships in the U.S. apparel industry. We find that recent diffusion of modular practices is driven primarily by the product market. We also show that modular systems affect business-unit performance (particularly operating profits) where they are combined with complementary investments in information systems linking apparel suppliers with retail customers.     

Net entry behaviour in Greek manufacturing: consumer, intermediate and capital goods industries

This research explores the nature and causes of net entry of firms in three groups of Greek manufacturing industries–consumer, intermediate and capital goods. The research questions whether or not the determinants of net entry rates across sectors are different. Econometric analyses reveal that, indeed, there are significant differences in the determinants of net entry rates across industry groups, but also there is strong within-group correlation across sectors.     

Product profitability: Causes and effects

The aim of this study was to determine the extent and the reasons for variation in the profitability of a product. The underlying hypothesis was that all products are not profitable. Furthermore, it was assumed that activity-based costing (ABC) would indicate greater differences in the profitability of products than the previously used marginal costing system. The case study was conducted in a company in the metal industry that manufactures and assembles industrial goods. First, the activity chains were modeled and the activity-based costs were calculated. Second, the activity-based cost of the final products was compared with the selling prices to determine the profitability. The results show that the profitability varies significantly. The most profitable 20% of the products generate more than 150% of the profits and 50% of the net sales. Finally, the study identifies the characteristics of the most profitable products and discusses the reasons for the profitability.     

Determining safety stocks for production planning in uncertain manufacturing

When computing production plans and available-to-promise statements, the randomness of flow times and yield rates are the two major sources of uncertainty. Considering both of these uncertainties, this study employs a simple formula for computing the standard deviation for cumulative good product output of a particular product type at a particular time. Using this standard deviation, the necessary safety stock for that product type at that time can be obtained. This study was motivated by semiconductor wafer manufacturing, which requires many process steps performed by highly unreliable equipment. Such an environment causes the means and the variances in flow times to be generally larger than those for other industries. It also makes yield rates uncertain. Thus, when making order quotations and calculating production plans, safety stocks must be used to guard against the uncertainties of the manufacturing processes to ensure on-time-delivery ratios and to provide better customer service.     

作业成本法下医疗项目成本核算研究——以某公立医院创伤外科个性化3D模型制备为例

随着医院改革的不断推进,公立医院的运营模式正在向精细化管理的方向转变,而作业成本法是精细成本核算的工具之一.同时,3D打印技术越来越多地应用于医疗领域,文章通过作业成本法对个性化3D模型制备进行成本核算,实地考察项目流程,提出成本核算模型.作业成本法的先进性,不仅促进了医疗项目成本核算的准确性,更对医院成本管理具有重大...     

Managing platform architectures and manufacturing processes for nonassembled products

The article presents methods for defining product platforms and measuring business performance in process intensive industries. We first show how process intensive product platforms can be defined using the products and processes of a film manufacturer. We then present an empirical method for understanding the dynamics of process intensive platform innovation, allocating engineering and sales data to specific platform and product development efforts within a product family. We applied this method to a major product line of a materials manufacturer. We gathered ten years of engineering and manufacturing cost data and allocated these to successive platforms and products, and then generated R&D performance measures. These data show the dynamic of heavy capital spending relative to product engineering as one might expect in a process intensive industries. The data also show how derivative products can be leveraged from underlying product platforms and processes for nonassembled products. Embedded within these data are strategies for creating reusable subsystems (comprising components, materials, etc.) and common production processes. Hard data on the degree to which subsystems and processes are shared across different products frequently are typically not maintained by corporations for the duration needed to understand the dynamics of evolving product families. For this reason, we developed and applied a second method to assess the degree of reuse of subsystems and processes. This method asks engineering managers to provide subjective ratings on an ordinal scale regarding the use of technology and processes from one product to the next in a cumulative manner. We find that high levels of reuse generally indicate that a product family was developed with a platform discipline. We applied this measure of platform intensity to two product lines of integrated circuits from another large manufacturer. We used this method to gather approximately ten years of information for each product family. Upon analysis, one product family showed substantial platform discipline, emphasizing a common architecture and processes across specific products within the product line. The other product family was developed with significantly less sharing and reuse of architecture, components, and processes. We then found that the platform centric product family outperformed the latter along a number of performance dimensions over the course of the decade under examination.     

A comparative study of the adoption and implementation of target costing in the UK, Australia and New Zealand

Most of the studies on target costing (TC) only provide insight into the adoption and perceived benefits of TC, and do not address the levels of implementation of the technique. These studies also assume that TC is only relevant to manufacturing firms and therefore do not investigate the adoption of this technique in service firms, and consequently exclude service firms from their surveys and analysis. Furthermore, most studies do not examine factors influencing the adoption of TC systems. Contributing to these gaps in the literature, this paper reports the results of a survey among CIMA-qualified management accountants working in manufacturing and service firms in the UK, Australia and New Zealand on the adoption and implementation of TC. The study examines the importance of attributes of TC (namely relative advantage, compatibility, ease of use, result demonstrability, trialability) for decision makers to adopt and implement such cost and management accounting innovation. The survey indicates that TC is equally prevalent among manufacturing and service firms while in terms of the levels of implementation there is a significant difference between manufacturing and service firms. The study shows that there is a growing interest in the examination of all cost-reducing strategies at the planning stage and adoption of value engineering to incorporate customer requirements rather than focusing on the adoption of cost-cutting strategies at the production stage.     

Cost Accounting and Performance Measurement in a Just-in-Time Production Environment

There are normative statements in the literature, backed up by case observations and anecdotal evidence, which indicate that manufacturing companies operating just-in-time (JIT) production management systems should also change their cost accounting systems and place greater reliance on non-financial performance indicators. This study provides empirical evidence suggesting that JIT manufacturing companies which have made some degree of modification to their costing system demonstrate higher performance than JIT companies which have not made changes. The results also suggest that greater use of non-financial performance indicators is associated with higher performance irrespective of the production management system adopted.     

制造业中基于企业价值链的成本控制方法体系的探讨

中国制造业现阶段的竞争优势主要是价格,因此成本控制在企业管理中就成为了重点中的重点.本文基于企业价值链提出了制造业的成本控制方法体系.     

Logistics in Bulgarian manufacturing companies

This paper reports the results of a survey conducted to explore the development of logistics in Bulgarian manufacturing companies. Two areas have been examined in more detail: logistics organizational developments and logistics management practices. The results for three subsets of the investigated companies—state owned, private and foreign have been compared. The conclusions of the study suggest that during the last years logistics is becoming popular among Bulgarian manufacturing companies. This is reflected in their organizational structures as well as in the applied management practices. However, in every aspect of the analysis companies of Bulgarian ownership are lagging behind foreign companies operating in Bulgaria.     

An investigation into the mixed reported adoption rates for ABC: Evidence from Australia, New Zealand and the UK

An accumulated body of the literature confirms that the adoption of activity-based costing (ABC) can lead to a substantial improvement in organisational performance, productivity and profitability, and therefore encourages further adoption of the technique. However, studies investigating the diffusion of ABC have reported inconsistent and mixed results. This could cause uncertainty for many potential adopters of ABC (especially for those who follow the fashion and fads approaches) and influence their tendencies towards the adoption of ABC in the future. Addressing the diffusion process as a contextual factor, this study simultaneously investigates the adoption of ABC from the perspectives of different diffusion processes. Using two commonly adopted diffusion processes (the stages of adoption and the levels of adoption), this study examines the relationship between the reported adoption rates for ABC and the diffusion process approaches chosen to measure its adoption rates in three western countries: Australia, New Zealand and the UK. A similar questionnaire was used and more than 2000 qualified CIMA members (via a survey study and follow-up interviews) were targeted. The findings suggest a significant association between the reported adoption rates for ABC and the diffusion process approaches chosen to measure the adoption rates. The findings further suggest that the lack of a common understanding of ABC systems may have also contributed to the mixed reported adoption rates for ABC, as many ABC adopters have considered themselves adopters of traditional accounting systems by mistake (especially when they are dealing with ‘facility costs’ as one of the main cost hierarchies under ABC systems).     

Lockout/tagout and operational risks in the production control of manufacturing systems with passive redundancy

This paper addresses problems associated with production control and occupational safety in a manufacturing system prone to failure involving two machines working in passive redundancy. Machines turning out one part experience two modes of failure and repair: firstly, where failure occurs when a machine remains in fair condition; and, secondly, where such failure results in outright breakdown. Accordingly, we examine both modes of failure for their impact on a flexible manufacturing system (FMS) with respect to production control in terms of costs associated with lockout/tagout procedures and corrective maintenance. This study seeks to identify optimal costs related to backlogs, inventories and maintenance over an infinite planning horizon, along with levels of occupational risk where production control includes efficient planning of lockouts/tagouts. Our study offers numerical methods which may be employed to achieve optimal conditions in setting control policies. A numerical example and sensitivity analysis support this approach.     

The manufacturing/design interface

The paper explains why the traditional relationship between design and manufacturing needs to be changed and what it should be replaced with. Traditionally, the relationship has been sequential. At the beginning of the innovation process design goes ahead alone, manufacturing's input being largely overlooked. Only after the design has been completed does manufacturing take over responsibility, and only then may it emerge that re-design is necessary to make production feasible. The results can be high costs, late delivery and disappointing performance. The changes that have made this practice less supportable include shortened product lifecycles, Japanese competition, customers becoming increasingly quality-conscious, need to deliver exactly on time, and minimization of inventories. Fortunately, new technologies such as CAD/CAM and FMS have come along that can help to rectify these deficiencies; how far they are taken up and effectively used depends on the sharp distinction between the functions being discarded and replaced by their substantial integration. Possibilities that each enterprise could explore include ensuring continuous communication and cooperation between the functions, joint problem solving, replacement of functional management by project management, supplier involvement, elimination of the status differential between design and manufacturing, design for manufacturability, and better understanding by the design function of the realities of the business world. The author warns that integration may not be a universal cure. In particular, he suggests that the innovations closely linked with scientific advances may need some degree of functional differentiation. Changes in the competitive environment require manufacturing organizations to change their view on the relationship between manufacturing and design, and on the way the interface between these two functions has to be managed. In this paper we will first describe the traditional view. Afterwards we will describe the environmental changes that make us question the effectiveness of this view. Finally in a third part we will describe the characteristics of the new approach.     

Schedule evaluation in unstable manufacturing environments

This paper provides a new approach to validate the feasibility of schedules of multiple-step mixed-model unstable manufacturing environments with different changeover times. Traditionally, continuous lines in a manufacturing process run the same sequence in order to minimize WIP inventory and lead time. Nevertheless, multiple reasons such as different product mixes or setup times can lead managers to run different sequences in continuous lines. Unfortunately, lack of reliability of supply and demand in these environments makes it difficult to manage product inventories and often leads to starvation due to the discoordination between the schedules of both lines. This approach is based on a new type of visual representation of schedules and an estimate the probability of starvation. It assumes stochastic supply and demand and a predefined schedule sequence based on batches of different sizes.     

Integrated multi-period cell formation and subcontracting production planning in dynamic cellular manufacturing systems

In this paper, an integrated mathematical model of the multi-period cell formation and production planning in a dynamic cellular manufacturing system (DCMS) is proposed with the aim of minimizing machine, inter/intra-cell movement, reconfiguration, partial subcontracting, and inventory carrying costs. This paper puts emphasis on the effect of the trade-off between production and outsourcing costs on the re-configuration of the cells in cellular manufacturing systems (CMSs) under a dynamic environment, in which the product mix is different from a period to another resulting in the operational dynamism in the cells. The proposed model is verified by a number of numerical examples and related sensitivity analysis.     

AN APPLICATION OF ACTIVITY BASED COSTING IN THE AIR CONDITIONER MANUFACTURING INDUSTRY

AIRCO is a manufacturer of industrial air conditioner units whose management is concerned that their current traditional cost accounting (TCA) system is not accurately representing their product cost behavior. Under certain operating conditions, an activity based costing (ABC) system can provide relevant and accurate indirect cost information that assists in making customer, product, and process improvement decisions. An ABC system was successfully developed for AIRCO that indicated that their products do not consume overhead costs on a volume basis as represented by their current TCA system. Valuable product and process information were obtained. This case study details the development process that was used and the results that were obtained during the ABC analysis.