The biggest barrier to providing value to customers lies in the protracted difficulty that organizations experience in changing over from one delivery process to another. In order to tackle this problem, organizations may use two great insights: not wasting resources on processes that can be eliminated and reducing change-over time. To reduce change-over time, it is important to separate the internal from the external processes that characterize change-over.
Shigeo Shingo, the proponent of the change-over reduction strategy, notes that there are two kinds of activities taking place during the production process. Using the analogy of the press, Shingo states that there are those activities that take place when the press is running, while others have to wait until the press is stopped.
Those activities that require the press to be stopped include unbolting the die, pulling it out of the press and bolting the die in the press. However, when the press is running, the operator can look for the next die, move it next to the press and find wrenches as well as other tools.
The first kind of activities is internal since they take place at the press. The second group of tasks is external because they take place away from the place. This is typically what happens in most organizations. However, Shingo notes that a bit of planning could save a lot of time during the set-up. He avers that if operators or workers are able to carry out those tasks that do not require the press to be actually stopped, it would save half of the time.
Most companies are applying the same principle in order to reduce production time and cut down on the cost of production as well. Companies identify those activities that can be performed concurrently and those that are mutually exclusive. By so doing, they are able to ensure that most of the activities are carried out concurrently. One way of ensuring that this strategy works is by having two sets of workers.
In the airlines industry, the management reduces the production time by having big planes load cargo into big containers. This is because loading cargo into small containers will take more time, grounding the airplane for a long time. Having the airplane load into bigger containers takes less time to discharge cargo. The airplane then takes off again with more cargo or passengers as workers convert the load in large containers into smaller packages. This will take a longer time span but will not affect the schedule of the airplane.
There are several benefits for adopting Shingo’s strategy. To begin with, the company is able to realize increased production. This is because there is no wastage of time as there are no interruptions in the production process. Secondly, the strategy increases efficiency as it ensures the production process takes continuously. In addition, the workforce does not waste time unnecessarily.
Companies adopting Shingo’s strategy also realize increased profits and an expansion of the market. This is because they are able to produce goods and services within the shortest time possible; thereby, being able to beat their competitors and getting to the market in the shortest time possible. Moreover, they are able to respond to customer requests within a short time by ensuring that most external activities are accomplished while the internal ones are taking place.
Another concept in the production process involves avoiding obsolete inventories, especially where fashionable products are concerned. Companies strive to ensure that they produce goods that meet their customers’ specification at any given time. This is because customers demand products that meet their specific needs at low costs and at an appropriate time.
However, product customization involves increased use of research and development, manufacturing, and marketing resources, which result into increased unit cost. Establishing a balance between these tradeoffs becomes a core challenge, which most manufacturers in today dynamic business environment has to address; this allows them to continuously align their product and process design, so that the maximization of customer value and the minimization of cost can be achieved simultaneously.
Many researchers aver that a strategic product design should be modularized; this is due to modularization increasing product variety without seriously affecting production costs. The concept is also commonly used in connection with mass customization to highlight customizing standard products, using a low cost to create high customer value.
Previous researchers have suggested two designs: a postponement strategy recommends delaying some value-adding processes until the customer order arrives; and the customer order decoupling point (CODP) strategy breaks the supply chain process into two sub-processes, where production shifts from being make-to-stock to being make-to order (Lee & Corey, 1994). A successful process design has to strategically consider these two concepts, thereby the whole supply chain process efficiency and responsiveness can be gained simultaneously.
In terms of the product life cycle (PLC), much is written in the literature about its strategic implications in terms of product, market, manufacturing, organization management perspectives, nevertheless, little is known about its operational perspectives, particularly for product and process design. This leads to the motivation of this thesis, which is to investigate usefulness of the product and process design concepts across the PLC.
Basing on the previous research, four products and process concepts are considered in this thesis: they are modularization, mass customization, the customer order decoupling point, and postponement. These are the processes that ensure customers get products with the specific requirements that they need; products that meet the customers’ expectations.
Fashionable products are quite critical. This is because failure to meet customers’ needs and requirements would result into obsolete inventories and huge losses. This means that the production process has to be split into phases to allow for any changes that may arise. A good example is in the making of fashionable attires. The textile company has to wait details such as color before completing the production process.
There is an increasing interest in business strategies that focus on creating customer-customized products.
The trend of increasing product variety is stimulating not only fresh examination of business strategies such as Mass Customization but also the design of new order fulfillment systems to deliver high levels of customer-focused variety (Brabazon & MacCathy, n.d.). For example, the principles of postponement and operations reversal are two strategies that are receiving attention as a result of the challenges of producing greater amounts of variety and the demands for ever-shortening lead times.
However, producers of capital goods and high-ticket items, such as automotive vehicle manufacturers, are reluctant to employ mid-process inventories, being keen on the principles of lean manufacture, an objective of which is to strive for continuous processes with zero or minimal buffers (Alford et al, 2000). Moreover, the competitive market place and continual pressure on production costs translate into the need for manufacturing facilities to be highly utilized (Brabazon & MacCathy, n.d.).
Nevertheless, these sectors experience the challenge of increasing product variety. In the medium term the variety envelope may be stable, but in the short term the variety through manufacture must be shaped by customer orders.