Basic Manufacturing Terminology | What is Basic Manufacturing – raw materials | supply chain | manufacturing
Basic Manufacturing Terminology | What is Basic Manufacturing
Every supply chain starts off with raw materials. Things like trees, petroleum and minerals. And through a series of manufacturing processes, we convert these raw materials into finished products that get sold to an end-user.
First, let’s talk about the three kinds of inventory that you’ll find in a factory. The things that factories buy are their inbound materials. The inventory in the middle is called work in process, or WIP. And their outputs are called finished goods. You generally want to keep all three kinds of inventory as low as possible. But you need to be careful because if you run out of the inbound inventory, you could shut down the entire manufacturing line. Next, let’s talk about capacity. There’s only so much a factory can produce at one time, and this is the capacity.
The things that limit the capacity are called constraints. Constraints might be caused by equipment, not being able to hire enough people or to buy your inbound materials. Factories don’t usually operate at their full capacity. You call the amount of capacity that’s actually being used the utilization rate. So a factory that has a 50% utilization is only using half of its capacity. While high utilization rates are generally good, factories need some down time to do preventative maintenance, or PM.
PM helps to avoid unplanned shutdowns because of a machine malfunction. Also, supply chain professionals understand that you don’t want to have a factory running at a high utilization rate unless you’re sure that customers are going to buy your products. Because that would just mean you’re making unnecessary finished goods inventory.
Now, let’s look at how we structure a manufacturing or assembly line. The steps in a manufacturing process are often called workstations, work centers or work cells. The list of components that go into a product is called the bill of materials, or the BOM. When you presort and arrange the parts that will be used in a workstation, that’s called kitting.
And kitting is often done in a distribution area called a supermarket. The time required to complete a step in a manufacturing process is called the takt time. One way to ensure that a series of manufacturing steps will work smoothly is to make sure that they all have similar takt times. That’s called balancing, or leveling, a production line. When you change over a line from making one product to another, there’s usually some setup time, during which you can’t make anything. Minimizing setup time can improve your efficiency.
To do this we use a process improvement technique called single minute exchange of dies, or SMED. And last, but certainly not least, in any manufacturing environment safety has to be a top priority. When people need to wear special equipment like steel toed shoes or safety glasses, this is called personal protective equipment, or PPE.
Manufacturing is about converting raw materials and components into finished products. And by understanding the basics you can do a much better job of planning and managing the manufacturing processes in your own supply chain.