In order to meet the customer's demand, it is essential to design a process that will achieve the required output in terms of quality, cost and time. During design, two main aspects must be considered: transformed resources-which include materials, information, and people-and transforming resources, namely people and machines.
Transforming resources are the elements that undergo changes during the production process. To give some examples we can have raw materials that are processed to become finished products, information that is processed to generate useful data, or people who acquire new skills through training. Transforming resources, on the other hand, are the agents that carry out these transformations, such as machines that perform mechanical processing or workers who apply their skills to complete tasks.
To optimize the management of transformed resources, with a focus on time, it is crucial to compare two elements:
- lead time requested by the customer: how long the customer is willing to wait between order and delivery;
- process-lead time: how long it takes to produce the output once the order is received.
When the lead time required by the customer is greater than the process lead time then the latter can be synchronized to the customer's demand. In other words, this means that production is activated only when demand arrives. In most cases, however, the customer wants the product/service in less time than it takes to make it; when this happens we have two choices:
- work on the process to shorten its lead time in order to synchronize itto the demand;
- introduce at one or more points in the process uncouplingand stocks, that is, interruptions to the flow of the stream.
The decoupled process
The decoupled process consists of either forecasting (push) activities-which involve the use of systems such as Material Requirements Planning (MRP)-or restoring (pull) activities involving kanban-type systems.
In the logic pushneeded material requirements are determined in advance: material stock is generated based on forecasts of use-regardless of downstream production capacity-while batches being processed are "pushed" from one center to the next.
In logic pull instead, material stock is restored after consumption according to available downstream capacity; inventory sizing of needed materials is defined in advance and batches being processed are "pulled"from one center to the previous.
In order to create a synchronized flow, as mentioned above, the lead time required by the customer must be greater than the process lead time. This, however, is a necessary but not sufficient condition. In order to work synchronously, it is in fact also necessary that all of the following conditions be met:
- have the ability to work with batches comparable to those requested by the customer;
- having production process steps with cycle times that are comparable to each other;
- having stages dedicated to individual production streams, i.e., individual processes;
- have process steps geographically close;
- have inherently stable phases.
When only one of these conditions is not met then a decoupling should be inserted.
Organizational models for managing transformed resources
When we introduce decoupling and inventory, the process is divided into at least two parts: taking the last decoupling as a reference, upstream of this there is the decoupled process, while downstream the activities are synchronized with demand and occur after an order arrives.
Based on where the last decoupling point is located, different customer response patterns are defined.
- Engineer to Order (ETO): the design and engineering stages depend on the arrival of a specific order and the process is consequently almost entirely synchronized.
- Purchase to Order (PTO): the company buys raw materials and semi-finished products from suppliers only after receiving an order.
- Make to Order (MTO): inventories are upstream, consisting of raw materials and semi-finished goods ordered from suppliers based on forecasts or on restoration. The synchronized process coincides with the start of production.
- Assembly to Order (ATO): inventories are prepared at the beginning of the last stages of production and the last part of the production process is synchronized with customer demand.
- Make to Stock (MTS)or Delivery to Order (DTO): inventory is made up of finished product; it is the model that allows the customer to respond with the minimum lead time.