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Generation of a Data Model For Quotation Costing Of Make To Order Manufacturers From Case Studies
(2022)
For contract or make to order manufacturers, quotation costing is a complex process that is mainly performed based on experience. Due to the high diversity of the product range of these mostly small or medium-sized companies (SMEs) and the poor data situation at the time of quotation preparation, the quality of the calculation is subject to strong variations and uncertainties. The gap between the initial quotation costing and the actual costs to be spent (pre- and post-calculation) is crucial to the existence of SMEs. Digitalization in general can help companies to get a better understanding of processes and to generate data. For improving these processes, an understanding of the important data for that specific process is crucial. Accurate quotation costing for customized products is time-consuming and resource-intensive, as there is a lack of an overview of data to be used within the process. This paper therefore derives a data model for supporting quotation costing in the company, based on literature-based costing procedures and recorded case studies for quotation and calculation. Based on the results, SMEs will have a first overview of the needed data for quotation costing to optimize their calculation process.
Applying Game Theory in Procurement. An Approach for Coping with Dynamic Conditions in Supply Chains
(2014)
Producing companies are facing continually changing conditions accompanied by higher requirements with respect to the flexible configuration of their supply chain. The challenge resulting from this initial situation is to develop systems that have the availability of adjusting their planning procedures and aims depended on the situation and therefore accommodate the increasing demand for flexibility. To address this challenge game theory seems to be a new and promising approach. The aim and added-value of the research work described here is to develop a decision model for the area of procurement using solutions concepts of game theory. Especially in times of high volatility such a decision model can support material requirements planners better than today's common selective planning logics.
In this paper the model to be solved by game theoretic solution concepts is presented. A research study has been conducted which proved the need for combining existing methods of procurement quantity calculation by means of game theoretic solution concepts. Some of the results of this study are presented in this paper. In the last part of the paper a structure for classifying game theoretic models is presented. This structure should support in selecting the appropriate solution concept for real-life decision-situations and is able to support in any practical application-field finding out the most appropriate game theoretic solution concept.
A company can choose between three generic competitive strategies. Alongside the strategy of cost leadership are the strategy of differentiation and the strategy of focussing on niches, although we will not be discussing this latter any further here. The strategy of cost leadership is based on the achievement of “economies of scale”, so generating advantage from the benefits of cost reduction, learning curve effects and automation. In the strategy of differentiation the focus is on “economies of scope” which enable the customer-specific products to be offered, but this is generally achieved only with an increase in the complexity of products and processes. In the past it was assumed that these two strategies were mutually exclusive, as an increase in the economies of scale basically leads to a reduction in the economies of scope, and vice versa. But in order to survive in the international competitive arena companies in the high-wage countries need increasingly to offer individually tailored products at competitive prices. The target to be aimed at is therefore customer-specific products at the cost of mass production, so resolving the dilemma between economies of scale and economies of scope. For this it is necessary to optimise the alignment of all the structural elements in both the product and its production, because of the high level of their interdependence.
The areas on which we will focus our review and designs in the following will be what are known as product-production systems, or more briefly, production systems. This topic includes not only the resources and processes of the value creation systems, but also the products produced and offered on the market by a company as one connected entity. In order to tackle the challenges mentioned above, it is necessary to make it possible to measure and compare the current position of any given production system on the see-saw between economies of scale and economies of scope, and then be able to redesign specific facets of them as a second phase. A method of integrative evaluation and design of production systems is presented below for this purpose.
Industrial production in high-wage countries like Germany is still at risk. Yet, there are many counter-examples in which producing companies dominate their competitors by not only compensating for their specific disadvantages in terms of factor costs (e.g. wages, energy, duties and taxes) but rather by minimising waste using synchronising integrativity as well as by obtaining superior adaptivity on alternating conditions. In order to respond to the issue of economic sustainability of industrial production in high-wage countries, the leading production engineering and material research scientists of RWTH Aachen University together with renowned companies have established the Cluster of Excellence “Integrative Production Technology for High-Wage Countries”. This compendium comprises the cluster’s scientific results as well as a selection of business and technology cases, in which these results have been successfully implemented into industrial practice in close cooperation with more than 30 companies of the industrial production sector.
Maximising economies of scale in individualised production is a vital issue for producing companies in high wage countries. A decisive enabler for this is the management of product and process complexity by systematic standardisation. Due to the strong and far-reaching impact of complexity on the value added chain, its management requires an integrative consideration of the entire product and production system.
The following paper introduces a methodology facing this challenge. The core element of this methodology is an integrative and complexity-focused assessment model. This assessment model has been validated experimentally by analysing key company data from more than 50 German toolmaking firms. Findings of this empirical investigation are presented in this paper.
Manufacturing companies of the machinery and equipment industry find themselves more than ever exposed to a rapidly changing competitive environment. In particular, the resulting diversity of planning and control processes confronts organisations and information systems with a significant coordination effort. To this day, planning and execution of order processing – from offer processing to the final shipment of the product – is still a part of the production planning and control (PPC), which is almost entirely integrated into information systems. Though, in order to manage dynamic influences on processes within order processing, there can be found a deficiency in the processing of decision-relevant and real-time information. Partly, the reason for this is a missing or incorrect feedback of process relevant data, so that the planning results, gained by the use of information systems, differ to the current process situation.
The concept of Manufacturing Resource Planning (MRP II) still represents the central logic of production planning and control. However, the centralised and push-oriented MRP II planning logic is not able to plan and measure dynamic processes adequately, which, due to diverse disturbances, often occur in production environments. Furthermore, specific weaknesses of MRP II-based systems are the lack of support for order releases, the planning principle based on average values and the successive planning method as well as the use of limited partial models. As a result a successive planning method leads to a dissection of PPC-tasks into smaller work packages and so strides away from a holistic approach and the achievement of an optimal solution. Similarly, a planning, focusing on a general business objective system, using a partial planning approach due to isolated considerations is not possible. Insufficient consideration of the current load horizon and the current capacity utilization, non-existing or delayed feedback on order progress as well as faults and poor availability and transparency of information can be named as further weaknesses of MRP II-based systems.
Nowadays one of the most challenging tasks of producing companies is the growing complexity due to the globalization and digitalization. Especially in high wage countries, the ability to deliver fast and to a fixed date gets more and more important. To achieve this logistic target, it is necessary to optimize the Production Planning and Control (hereinafter PPC). This study investigates the effects of a change of the scheduling parameters on a target system. The focused research questions are: How can the effect of a scheduling parametersvariation on the target system of the PPC can be displayed efficiently? Is it possible to review the effect of the scheduling parameters-variation quantitatively and to derive action options?
The topics Internet of Things and Industry 4.0 increasingly lead to the fact that the customer is increasingly focused on manufacturing companies. He wants to know delivery date of the product, wants to make changes at short notice, get an individualized product and much more. Technologically, these requirements have already been met, but the structures within the company as well as the operational processes are not yet or only partially prepared to cope with the increasing complexity and dynamics of production. This leads to many deviations with which the production controller must deal, whether they are complex or trivial.
In order to counteract the increasing number and frequency of deviation situations which are currently encountered with complex manual interventions, it is necessary to systematically evaluate deviations and then to allocate them a dominant reaction strategy (manual, partially automated, automated) from which a suitable reaction measure can be derived. This relieves the production controller, since assistance systems partially eliminate deviations independently.
As a result, the production controller gets more time to deal with the cause of deviations so that a new occurrence of deviations can be avoided and the number of deviations can be reduced sustainably. The following paper provides a solution for the assessment of deviations. In addition, it includes differentiation logic to allocate one of the three different reaction strategies to the identified deviation.
Production in high-wage countries can be made more efficient, cost-effective, and flexible by solving the conflict between planning and value orientation. A promising approach is to focus on planning and decision-making processes (production planning and control, design of production processes and machinery, etc.) and to aim to maximize overall planning efficiency. Planning efficiency can be expressed as the ratio between the benefit generated by preparing detailed process instructions to produce the parts or components and the corresponding planning efforts. Industrial companies wanting to gain a competitive advantage in dynamic global markets have to identify a set of non-dominated solutions with the most favorable effort–benefit ratio rather than a single solution. The optimum between detailed planning and the immediate implementation of value-adding activities (process steps) in the process chain needs to be found dynamically for each product.
This research area focuses on the management systems and principles of a production system. It aims at controlling the complex interplay of heterogeneous processes in a highly dynamic environment, with special focus on individualized products in high-wage countries. The project addresses the comprehensive application of self-optimizing principles on all levels of the value chain. This implies the integration of self-optimizing control loops on cell level, with those addressing the production planning and control as well as supply chain and quality management aspects. A specific focus is on the consideration of human decisions during the production process. To establish socio-technical control loops, it is necessary to understand how human decisions are made in diffuse working processes as well as how cognitive and affective abilities form the human factor within production processes.
One of the central success factors for production in high-wage countries is the solution of the conflict that can be described with the term “planning efficiency”. Planning efficiency describes the relationship between the expenditure of planning and the profit generated by these expenditures. From the viewpoint of a successful business management, the challenge is to dynamically find the optimum between detailed planning and the immediate arrangement of the value stream. Planning-oriented approaches try to model the production system with as many of its characteristics and parameters as possible in order to avoid uncertainties and to allow rational decisions based on these models. The success of a planning-oriented approach depends on the transparency of business and production processes and on the quality of the applied models. Even though planning-oriented approaches are supported by a multitude of systems in industrial practice, an effective realisation is very intricate, so these models with their inherent structures tend to be matched to a current stationary condition of an enterprise. Every change within this enterprise, whether inherently structural or driven by altered input parameters, thus requires continuous updating and adjustment. This process is very cost-intensive and time-consuming; a direct transfer onto other enterprises or even other processes within the same enterprise is often impossible. This is also a result of the fact that planning usually occurs a priori and not in real-time. Therefore it is hard for completely planning-oriented systems to react to spontaneous deviations because the knowledge about those naturally only comes a posteriori.
Long-term production management defines the future production structure and ensures the long-term competitiveness. Companies around the world currently have to deal with the challenge of making decisions in an uncertain and rapidly changing environment. The quality of decision-making suffers from the rapidly changing global market requirements and the uniqueness and infrequency with which decisions are made. Since decisions in long-term production management can rarely be reversed and are associated with high costs, an increase in decision quality is urgently needed. To this end, four different applications are presented in the following, which support the decision process by increasing decision quality and make uncertainty manageable. For each of the applications presented, a separate digital shadow was built with the objective of being able to make better decisions from existing data from production and the environment. In addition, a linking of the applications is being pursued:
The Best Practice Sharing App creates transparency about existing production knowledge through the data-based identification of comparable production processes in the production network and helps to share best practices between sites. With the Supply Chain Cockpit, resilience can be increased through a data-based design of the procurement strategy that enables to manage disruptions. By adapting the procurement strategy for example by choosing suppliers at different locations the impact of disruptions can be reduced. While the Supply Chain Cockpit focuses on the strategy and decisions that affect the external partners (e.g., suppliers), the Data-Driven Site Selection concentrates on determining the sites of the company-internal global production network by creating transparency in the decision process of site selections. Different external data from various sources are analyzed and visualized in an appropriate way to support the decision process. Finally, the issue of sustainability is also crucial for successful long-term production management. Thus, the Sustainable Footprint Design App presents an approach that takes into account key sustainability indicators for network design. [https://link.springer.com/referenceworkentry/10.1007/978-3-030-98062-7_15-1]
In this paper, we firstly present a target system which is deduced to assess the economic profitability of reverse supply chains. Considering this, we analyse process reference models to define relevant components of an appropriate target system.
Subsequently, we define applicable business models which are the basis for the manufacturer to offer new services to its customers on the one hand and to manage a goal-oriented return, recovery and resell of used products and components on the other hand. This will be done based on the morphology methodology in order to understand the characteristics and attributes of reverse supply chains.
Today, manufacturing companies are facing the influences of a dynamic environment and the continuously increasing planning complexity. Using advanced data analytics methods, processes can be improved by analyzing historical data, detecting patterns and deriving measures to counteract the issues. The basis of such approaches builds a virtual representation of a product – called the digital twin or digital shadow.
Although, applied IT systems provide reliable feedback data of the processes on the shop-floor, they lack on a data structure which represents real-time data series of a product. This paper presents an approach for a data structure for the order processing which overcomes the described issue and provides a virtual representation of a product. Based on the data structure deviations between the production schedule and the real situation on the shop-floor can be identified in real time and measures to reschedule operations can be identified.
One of the major challenges facing today´s manufacturing industry is to differentiate from competition in a highly globalized world. As a consequence to the increasing competitive pressure, many companies transform their product centered business models towards service based business models to differentiate from competition. However, the transformation is often underestimated regarding its complexity and its management challenges to behavioral change.
As a consequence lots of transformation initiatives fail. Besides difficulties in structuring the magnitude of changes in processes and structures, many transformation managers do not perceive the risk of employee resistance against changes, which is one of the key factors causing the failure of transformation. The objective of this paper is to enhance the existing body of research on manufacturer´s organizational transformation towards Product-Service Systems. More detailed, the objective is to develop new knowledge to support the management during the decision-making process in the way how and by means of which instruments the change of behavior can be supported when transforming from a manufacturer to a solution.
We developed a reference framework which structures and defines the relevant dimensions of behavioral change. The identification and validation of the success factors build the second component of our research. We conducted an empirical investigation in the German manufacturing industry and got 79 data sets.
Structural equation modelling was applied for the analyses and the validation of the hypotheses. By this analysis we linked management practice with employee behavior and transformational success variables. On the basis of the gained insights decisions can be made concerning the successful transformation from manufacturer to a solution-oriented service provider.
One major problem of today’s producing companies is to reach a high adherence to delivery dates while considering the volatile market situation as well as economic aspects. This problem can only be solved by using a production control that is optimally adapted to the processes. A good working, process-oriented production control is essential for being able to control the production situation and to ensure a high adherence to delivery dates. Data generation and processing determine the success of production control. Current processes and IT systems have several shortcomings in meeting these challenges.
The solution for this problem is the so called “cyber physical production control” (CPPC). It optimally supports the production scheduler in his decision making process based on real-time high-resolution data. With the help of data analytics, the production controller receives decision support over various steps. Due to CPPC, the overall goal of a high adherence to delivery dates can be fundamentally increased.
In short-term production management of the Internet of Production (IoP) the vision of a Production Control Center is pursued, in which interlinked decision-support applications contribute to increasing decision-making quality and speed. The applications developed focus in particular on use cases near the shop floor with an emphasis on the key topics of production planning and control, production system configuration, and quality control loops.
Within the Predictive Quality application, predictive models are used to derive insights from production data and subsequently improve the process- and product-related quality as well as enable automated Root Cause Analysis. The Parameter Prediction application uses invertible neural networks to predict process parameters that can be used to produce components with desired quality properties. The application Production Scheduling investigates the feasibility of applying reinforcement learning to common scheduling tasks in production and compares the performance of trained reinforcement learning agents to traditional methods. In the two applications Deviation Detection and Process Analyzer, the potentials of process mining in the context of production management are investigated. While the Deviation Detection application is designed to identify and mitigate performance and compliance deviations in production systems, the Process Analyzer concept enables the semi-automated detection of weaknesses in business and production processes utilizing event logs.
With regard to the overall vision of the IoP, the developed applications contribute significantly to the intended interdisciplinary of production and information technology. For example, application-specific digital shadows are drafted based on the ongoing research work, and the applications are prototypically embedded in the IoP.
Real-time data analytics methods are key elements to overcome the currently rigid planning and improve manufacturing processes by analysing historical data, detecting patterns and deriving measures to counteract the issues.
The key element to improve, assist and optimize the process flow builds a virtual representation of a product on the shop-floor - called the digital twin or digital shadow. Using the collected data requires a high data quality, therefore measures to verify the correctness of the data are needed. Based on the described issues the paper presents a real-time reference architecture for the order processing.
This reference architecture consists of different layers and integrates real-time data from different sources as well as measures to improve the data quality. Based on this reference architecture, deviations between plan data and feedback data can be measured in real-time and countermeasures to reschedule operations can be applied.
The Impact Of Manufacturing Execution Systems On The Digital Transformation Of Production Systems
(2021)
With the focus of manufacturing companies on the digital transformation, Manufacturing Execution Systems are market-ready, modular software solutions for manufacturing companies to integrate the value-adding and supporting processes horizontal and vertical in the company. Companies, especially small and mediumsized companies, face high internal and external costs for the implementation of the MES modules. An advantage of MES is the possibility to implement the systems in a continually, module-by-module approach, with the benefit of timely distributed investments. By realizing fast improvements, companies can use the benefits for further module implementations. This paper proposes a maturity model to measure the impact of an MES on the digital transformation of the company’s production systems. The model fulfils two purposes. The first, companies can measure the impact based on the difference between its current maturity index and the potential index of an implemented MES. The second is, the user can identify what impact an MES has in general on the digital transformation since the developed maturity model is derived from an established industry 4.0 maturity model. The development of the maturity model is based on the methodologies of AKKASOGLU and focuses on the further development of an established model. As an outlook, the application of the model will be described briefly. The proposed maturity model can directly be used by practitioners and offers implications for further development of MES functionalities.
Industrial practice shows a strong trend towards digitalization. It is not only economic crises, such as those triggered by Covid-19, that are reinforcing this trend. It is also the entrepreneurial urge to fulfill customer wishes in the best possible way and to adapt to new requirements as quickly as possible. Due to the advancing digitalization, the role of business application systems in manufacturing companies is therefore becoming increasingly important. The data processed in IT-Systems represent a great potential, especially for the evaluation of change requests in production. Through efficient change management, companies can record and process changes quickly. However, the necessary data basis to decide on existing change requests is still hardly used. Existing IT-Systems for change management coordinate the processing of change requests, but do not relate to data of operational application systems such as Enterprise-Resource-Planning. Therefore, a conceptual approach is required for the evaluation of change requests. This approach is based on an objective recording system that enables the transformation from the change description to an evaluation space. The paper presents an approach for the systematic transfer of requirement characteristics into the world of operational IT-Systems.