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C H A P TER 7 The Conversion Cycle 325

COMPUTER-AIDED DESIGN (CAD). Engineers use computer-aided design (CAD) to design better
products faster. CAD systems increase engineers’ productivity, improve accuracy by automating repeti-
tive design tasks, and allow firms to be more responsive to market demands. Product design has been rev-
olutionized through CAD technology, which was first applied to the aerospace industry in the early
1960s.
CAD technology greatly shortens the time frame between initial and final design. This allows firms to
adjust their production quickly to changes in market demand. It also allows them to respond to customer
requests for unique products. The CAD systems often have an interface to the external communication
network to allow a manufacturer to share its product design specifications with its vendors and customers.
This communications link also allows the manufacturer to receive product design specifications electroni-
cally from its customers and suppliers for its review. Advanced CAD systems can design both product
and process simultaneously. Thus, aided by CAD, management can evaluate the technical feasibility of
the product and determine its ‘‘manufacturability.’’

COMPUTER-AIDED MANUFACTURING (CAM). Computer-aided manufacturing (CAM) is the
use of computers to assist the manufacturing process. CAM focuses on the shop floor and the control of
the physical manufacturing process. The output of the CAD system (see Figure 7-17) is fed to the CAM
system. The CAD design is thus converted by CAM into a sequence of processes such as drilling, turning,
or milling by CNC machines. The CAM system monitors and controls the production process and routing
of products through the cell. Benefits from deploying a CAM technology include improved process pro-
ductivity, improved cost and time estimates, improved process monitoring, improved process quality,
decreased setup times, and reduced labor costs.

Value Stream Mapping
The activities that constitute a firm’s production process are either essential or they are not. Essential activ-
ities add value; nonessential activities do not, and should be eliminated. A company’s value stream includes
all the steps in the process that are essential to producing a product. These are the steps for which the cus-
tomer is willing to pay. For example, balancing the wheels of each car off the production line is essential
because the customer demands a car that rides smoothly and is willing to pay the price of the balancing.
Companies pursuing lean manufacturing often use a tool called a value stream map (VSM) to graphi-
cally represent their business processes to identify aspects of it that are wasteful and should be removed.
A VSM identifies all of the actions required to complete processing on a product (batch or single item),
along with key information about each action item. Specific information will vary according to the process
under review, but may include total hours worked, overtime hours, cycle time to complete a task, and error
rates. Figure 7-18 presents a VSM of a production process from the point at which an order is received to
the point of shipping the product to the customer. Under each processing step, the VSM itemizes the
amount of overtime, staffing, work shifts, process uptime, and task error rate. The VSM shows the total
time required for each processing step and the time required between steps. It also identifies the types of
time spent between steps such as the outbound batching time, transit time, and inbound queue time.
The VSM in Figure 7-18 reveals that considerable production time is wasted between processing steps.
In particular, the transit time of raw materials from the warehouse to the production cell contributes sig-
nificantly to the overall cycle time. Also, the shipping function appears to be inefficient and wasteful,
with a 16 percent overtime rate and a 7 percent error rate. To reduce total cycle time, perhaps the distance
between the warehouse and production cell should be shortened. The shipping function’s overtime rate
may be due to a bottleneck situation. The high error rate may actually be due to errors in the upstream
order-taking function that are passed to downstream functions.
Some commercial VSM tools produce both a current-state map and a future-state map depicting a
leaner process with most of the waste removed. From this future map, action steps can be identified to
eliminate the non–value-added activities within the process. The future-state VSM thus is the basis of a
lean implementation plan. VSM works best in highly focused, high-volume processes in which real bene-
fit is derived from reducing repetitive processes by even small amounts of time. This technique is less
effective at eliminating waste in low-volume processes in which the employees are frequently switched
between multiple tasks.