Introduction to Manufacturing
This is the first in a series of articles intended to help Americans better understand an important industry that has shrunk to its lowest levels in more than a century. I don’t know how many segments I will write. If there is an appetite for this, I will cede the field to a long-time friend who is an acknowledged expert, or paywall these articles only because they entail far more work than other articles.
There are two kinds of manufacturing: discreet and process. Discreet manufacturers produce individual items, such as nuts, bolts, refrigerators, batteries and so forth. Process manufacturers produce things that are measured in volume and cannot be individually counted. Examples include paper, cheese and rolled steel.
Manufacturing, whether discreet or process, requires a facility in which to manufacture, a supply of direct materials that go into the items to be sold and a supply of indirect materials, used within the facility, that do not become part of the final product. All services are classified as indirect items. Indirect items include cleaning materials, adhesives, connectors, labels and so forth. Both direct and indirect items require storage, typically separate from one another.
There are two other kinds of items: Work in Progress, typically called WIP, and items that have been completed, typically called Finished Goods Inventory, FGI. There is machinery, which is where things begin to get complicated. Each machine has speed limitations. That is, it can only perform so many operations or cycles within eight hours. People have to operate the machinery, and they, too, have limited capacity. In a future article I will detail why it is much more difficult to do finite capacity planning than infinite capacity planning.
There are usually two types of layouts for manufacturing: production lines and cellular manufacturing. I designed a U-Shaped production line to turn out maintenance tool carts. The concept was simple: Place on the tool cart every tool needed for maintenance of an apartment or hotel room, label the pocket, and it was simple to determine at a glance if everything was present without the need to open tool boxes and count things. This cut turnover time in an apartment by one full day. Large property management companies may have as many as 5,000 apartments under management, which turn over approximately 1.3 times every year. Reducing 6,500 turnovers by one day each adds 6,500 additional available days for renting, or nearly 20 extra apartments to rent. There was no machinery required, and labor requirements were negligible. Hotels and prisons also expressed significant interest.
The carts themselves were made by a specialist manufacturer, called a job shop. These specialty manufacturers make prototypes and accept orders for small runs of products, fewer than a large manufacturer would need. There is a fundamental principle in manufacturing called marginal unit cost. Pricing an end item requires knowing approximately how many you will sell. There is a “set up” cost for designing the item, deciding which parts you will make yourself and which you will buy from others, setting up agreements for delivery of purchased components, and designing the molds or tools to create the basic item. These must all be spent to create the first item. After that, the marginal cost to produce the next item is basically labor and materials, very little.
An example that is easily understood is the latest Honda or Chevrolet. The cost to produce the first one is perhaps $65 million. After some sucker has bought that one, the rest sell for $10K each. Under that model, no one will ever buy the first one, so none of the items is ever produced.
The other way to lay out a manufacturing plant is cellular manufacturing. This is much more difficult to manage; there is no standard number of cells, and each cell produces a sub-assembly made from multiple other items. This all has to go to a final assembly point where the sub-assemblies are put together. The cells work in parallel making this faster than a production line. Rarely do all the cells produce at the same rate. Thus, workers need to be trained on multiple cells meaning training on multiple machines. The cost of training people on additional machines is significant.
I designed a manufacturing plant for a sofa manufacturer making multiple variations of sofas. We created a framing cell, which produced separate frames for each type of sofa. This included sawing lumber and plywood that were turned over to a frame assembly team to put the wood together into a frame. I’ll go into greater detail about that plant in a future article.
If the plant will manufacture instead of doing artisan work, it is necessary to have instructions for what materials to use, how to use them, and what to do with the finished product. In an artisan shop this is simply understood by the artisan, who does not need to interact with anyone else. For actual manufacturing, automation is necessary. This is typically done via an MRP (Material Requirements Planning) System. Other automation includes CNC (Computerized Numeric Control) machinery, which takes computer instructions to bend, drill, widen, coat or whatever other function the machine uses.
There are a variety of manufacturing improvement approaches which are used. In my personal experience, people tend to become worshipers of a single discipline. There are many that work, including Quality, Lean, Theory of Constraints and others. That usually blinds one to the best approach, which is often a mixture of the approaches.
There is far more to write on the topic that will still only scratch the surface. Look for that in forthcoming articles.
why is this so interesting?
Hard to stay out of the weeds in arriving at this topic. Some are interested in how we can bring automation and robotics to bear in horribly dirty and hazardous stuff like refining rare earths. Not my area but I see a huge challenge to industry to solve those sorts of issues. It was fascinating to that Musk decided to cast auto body major parts. Forget all those welds. To do that required a huge upfront investment. See https://www.designnews.com/automotive-engineering/teslas-switch-giga-press-die-castings-model-3-eliminates-370-parts and https://www.youtube.com/watch?v=CQfKZ5lo9dc.
For a nation that can afford considerable sums on video games that simply entertain, one wonders about where the next Musk's come from. I am barely aware of manufacturing engineering because I only did the prototype stuff through qualification testing. The steps to take a hand assembled piece of gear and create a production line was not in my work. I did see that often parts had to be redesigned in order to be able to rate produce, even in small lots.
I was stunned to learn that Apple under pressure agreed to assemble some stuff in Texas but had to import precision fasteners from China! No shops in Texas could produce those small screws, etc that Apple required. Maybe it was cost, but such gaps ought to be of concern to policy people.