Page 364 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

324 Chapter Ten

Work-in-Process Inventory
The lead time for a process is very closely related to the level of the work-
in-process (WIP) inventory. The WIP inventory is the amount of semifinished
units in between the process steps. For a given set of operations in a process,
the higher the WIP, the longer the lead time is likely to be. In other words,
WIP slows down the speed of a unit of product as it travels from the entry
point of the process until it becomes a finished product.

Throughput
Throughput is the rate at which a process produces its output. In a pro-
duction environment where customers will buy all units of product that are
manufactured (especially if there are demand backlogs), then it is highly
desirable to maximize throughput. The bottleneck in a production facility
acts as the primary constraint on its throughput; therefore attempts to
improve throughput must focus on the bottleneck operation.

Cost
In addition, the cost of products is particularly important in a manufacturing
environment. Since the price for which a product can be sold is usually
dependent upon the laws of demand and supply, organizations have a built-
in incentive to keep costs as low as possible in order to maximize its profit.
Cost typically has at least three main components: raw material, processing,
and overhead costs. Each of these cost components has to be carefully
managed in order to minimize the overall cost.

Flexibility
In an age of increasingly discriminating customers, where individuals are
now seeking unique customized products, flexibility is becoming ever more
important. Flexibility depends on the ability of a manufacturing system to
handle a wide variety of product types in an efficient way. Change and
market turbulence are some of the biggest challenges that a manufacturer
has to face, and flexibility is the main tool that we have to cope with change,
turbulence, and uncertainty.
Other manufacturing performance metrics include safety, process
ergonomics, human factors, and employee morale. These are all important
metrics that cannot be ignored. The bottom-line impact of these metrics is
that over the long and short term they determine, directly or indirectly, the
market share and revenues, as well as profitability. All of these ultimately tie
together into determining what the organization’s long-term business
viability will be.