Manufacturing Complexity in the World of Production Sebastian Fixson Technology, Management and Policy Program (TMP) Massachusetts Institute of Technology [email protected] Outline of the Presentation for Research Seminar in Engineering Systems ESD.83 Prof. David Mindell November 14, 2000 Overview !"What is the 'manufacturing system'? • Differentiation between product development and manufacturing !"History Manufacturing Philosophies • Craft Production • Mass Production • Lean Production • ?? !"Complexity and Systems Perspective in the Manufacturing World • Efficacy and Efficiency • Flexibility • Adaptability / Learning • Holistic View !"References • Manufacturing at MIT • LiteratureProduct Development and Manufacturing: Intersecting Waterfall Model Enterprise needresourcesModelingEngineeringPilot PlantBuildCertifyMANUFACTURINGMaintenanceReconfigurationAdaptationShutdownEngineeringInterface descriptionConception & model buildingClient need & resourcesCertificationOperation & diagnosisEvaluation & AdaptationProcess WaterfallProduct Waterfalladapted from Maier & Rechtin, 2000 History of Manufacturing Philosophies (I): Craft Production !"Craftsman's Production • Characteristics o Highly skilled work force o Decentralized organizations o General-purpose machines o Very low production Volumes • Advantages o Very flexible o Economics focused on variable cost; low level of specific investment • Disadvantages o High total unit cost !"Relation to Complexity • Capability limits constrain the growth of the system • System is incentive based (agents maximize utility) • Product price justifies transaction costsHistory of Manufacturing Philosophies (II): Mass Production !"Characteristics: • Technology o Product has to have a long live (system needs stable environment) o Interchangeable Parts (Same gauging system, Prehardend Metals, etc.) o Very short "Cycle Times", Single-purpose Tools • Work force o Only unskilled workers required • Organization o Move to higher levels of vertical integration (e.g. Rouge Complex) o Vertical Integration necessary to fund complex technologies (Chandler) !"Advantages • Delivers much higher productivity than craft production as long as product variety is low • Only unskilled labor required !"Disadvantages • High fixed cost (large investments) • Inflexible • Only unskilled labor required (=> inflexibility increases over time) !"Relation to Complexity • Manufacturing system "grow” more and more complex over time (Example: Pratt and Whitney Grinding Machine) • Increasing specialization in disciplines makes it harder to see the 'big picture,' i.e. the system • Increasing system complexity made optimization disciplines simultaneously more important and increasingly difficult o Operations Research o Operations Management o ..History of Manufacturing Philosophies (III): Lean Production !"Characteristics: • Historical specifics in post-WWII Japan: small home market, strong labor positions, little capital available, strong global competition • in essence: Toyota Production System • Technology o Simple, error-proven o Avoid unnecessary complexity (= understand your process) • Work force o Skilled workers required o Life-long job commitment, seniority pays • Organization o Everyone in the production line is both a customer and a supplier (ref. A. Smith) o Decision delegation to lower levels in the hierarchy: workers can (and are expected to) stop the line when they detect an error o System in place that quickly traces every problem, once discovered, to its ultimate cause (Five Whys) o Manufacturing, supply network, and dealership become one system; o that makes smoothing possible (fragile system) !"Advantages • Delivering much higher total productivity than mass production due to waste (muda) elimination • Skilled labor required • Ties in customer and supplier into the value chain !"Disadvantages • If pushed to extreme efficiency, system is fragile • ..? !"Applications beyond the automotive industry • Aerospace (Lean Aerospace Initiative at MIT) o Aero/Astro has historically been in the world of military and long-term development, i.e. the focus was primarily on technical performance o After the shift of geopolitical situation in the early 1990s, the demand profile on these large-scale and complex systems has changed by increasing the value of time and cost o LAI: Better, Faster, Cheaper instead Faster, Higher, Farther (Murman et al. 2000) • Appliances, Machinery, etc.Complexity and Manufacturing today !"In the past, technology-stable environments that were created for large scale military projects facilitated the growth of complex systems with increasing complexity (see P&W) !"Economics vary for different processes, i.e. they have their own logic; Depending on the level of analysis, the answer can be completely different => Holistic approach can change the economic dynamics • Different level of analysis: o Process Improvement o Operations Management Development o Factory Flow Redesign o Lean Infrastructure !"Lean Production = Complex Adaptive System? • Despite being fragile, does it dampen the volatility (bullwhip-effect)? • Perfection = Flexibility? • Flow = Dynamic? • Pull = Adaptation (short term)? • Learning = Adaptation (long term)? • .. Future Paths? !"In volatile and fast changing markets, focus may shift from 'perfect efficiency' for one specific environment to survival in many different ones • Stochachstic nature and behavior of environment • Lean Production systems are fragile by nature (operate on extreme end of operation) • Flexibility becomes a value in itself (not equals waste) !"Agile Manufacturing? • at marketing level: agile competition is characterized by customer-enriching, individualized combinations of products and services • at production level: agile competition is characterized by the ability to manufacture goods and to produce services to customer order in arbitrary lot sizes !"Impact of increasing importance of software technology • Spiral model (more prototyping than production?) • Software becomes core and hardware is modeled around? !"Relevance of manufacturing? • Core competence? (Car vs. Electronics) • Systems View: Role and Level of Importance of Manufacturing within the Value Chain (Strategic Decision)References (I) !"Manufacturing at MIT • Laboratory for