Koren Y. The Global Manufacturing Revolution: Product-Process-Business Integration and Reconfigurable Systems
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Appendix A
Computer Controlled Milling
Machine in 1973
CNC–AC milling machine (McMaster University, Hamilton, Canada, May 1973)
Yoram Koren invented and built the world’s first adaptive control (AC) of a milling
machine, integrated with home-built CNC. The control computer of both the CNC
and the AC was Hewlett-Packard HP-2100. It was a 16-bit computer with a memory
of 4096 words (4 K), with cycle time of 1 microsecond and 16 I/O slots that were used
The Global Manufacturing Revolution: Product-Process-Business Integration and Reconfigurable Systems
By Yoram Koren
Copyright Ó 2010 John Wiley & Sons, Inc.
381
to send signals to the three control loops and obtained signals from a sophisticated
force sensor mounted on the spindle (the force sensor was designed by Professor
J. Tlusty).
This CNC–AC system was demonstrated at the 1st NAMR Conference, at
McMaster University. Hamilt on, Canada, May 14–16, 1973. The AC algorithm may
be found in Chapter 8 of the book Computer Control of Manufacturing Systems,
McGraw Hill, 1983. The algorithm of the CNC interpola tor was published at: Koren,
Y.: Interpolator for a CNC system. IEEE Trans. on Computers. Vol. 25, No. 1, pp. 32-
37, January 1976.
382 APPENDIX A COMPUTER CONTROLLED MILLING MACHINE IN 1973
Appendix B
Three Types of Manufacturing
Systems
The Global Manufacturing Revolution: Product-Process-Business Integration and Reconfigurable Systems
By Yoram Koren
Copyright Ó 2010 John Wiley & Sons, Inc.
383
Appendix C
Business Cycles
All market economies regularly go through cycles of recession (when output declines
and unemployment rises) and expansion (when output and employment rise). These
“business cycles” are one of the most important factors determining not only the profit
of manufacturing companies but also the socioeconomic conditions of the people.
Two important questions are why there are business cycles and what are the indicators
that may predict them.
Business cycles are a complex phenomenon that depends on the amount of money
available as well as on the relationship between demand and supply. A business
cycle starts to rise when demand for products increases, and then factories accelerate
their production. Because sales are rising, when demands are nearing full factory
capacity, companies decide to build new factories and to order new manuf acturing
equipment. And if demand rises further, factories accelerate production even more, etc.
...Eventually the cycle has to turn down
Sales stabilize.
Factories reduce production, and stop ordering new equipment.
Undesired inventories built up.
People stop buying so much and sales fall.
The economy starts to go downwards.
The Global Manufacturing Revolution: Product-Process-Business Integration and Reconfigurable Systems
By Yoram Koren
Copyright Ó 2010 John Wiley & Sons, Inc.
384
There are 10 indicators that help in predicting changes in business cycles:
1. New orders of consumer goods and materials.
2. Orders for new factories and new equipment.
3. Number of new private housing, measured by the number of building permits.
4. Average length of workweek of production workers in manufacturing
companies.
5. Weekly unemployment insurance claims.
6. Interest rate.
7. Money supply—the ease of getting credit (e.g., to buy cars, to pay salaries, etc.)
8. Percent of manufacturing companies receiving slower delivery from their
suppliers.
9. Index of stock prices.
10. Index of consumer expectations.
The first three indicators represent commitments to economic activities in the near
future. The combination of the above 10 indicators can predict the end of the bottom of
a business cycle (i.e., end of a recession) about 5 months in advance, and predict the
end of the business cycle peak about 9–10 months in advance. The building of a new
factory, however, takes more than 10 months. Therefore, building new plants and
ordering expensive equipme nt present a serious challenge that manufacturing com-
panies are facing before deciding on expansion. Assuming that business cycles occur
at different times at different regions of the globe, opening a new factory for products
that can be easily shipped from one country to another (e.g., hard disk) is less of a
dilemma than in the cases where it is expensive to ship high-volume products between
countries (e.g., cars, engines, etc.).
APPENDIX C BUSINESS CYCLES 385
Appendix D
Term Project: Project
Description and Requirements
PRODUCT DEVELOPMENT IN A COMPETITIVE
GLOBAL ENVIRONMENT
This project is a team project (3–5 students per team) which has three goals:
1. Design innovative products for mass customization and personalization.
2. Utilize flexible and reconfigurable manufacturing systems to produce the
products.
3. Establish business strategies to sell your new products.
General Requirements
.
Create a compa ny that will produce and sell a family of mass-customized
products.
.
Identify a product whose market share coul d be significantly increased if
designed with variants that fit various customers’ needs (i.e., mass customization
or personalization).
Past examples of products selected by students: wheelchairs, bicycles, car
seats, watches, backpacks, sport equipment, sunglasses, skate boards, office
furniture, chairs, golf clubs, etc.
The Global Manufacturing Revolution: Product-Process-Business Integration and Reconfigurable Systems
By Yoram Koren
Copyright Ó 2010 John Wiley & Sons, Inc.
386
.
Design a manufacturing system that produces the product cost-effectively.
Select equipment, draw factory layout diagrams, estimate capacity, etc.
.
Elaborate on a business model that will sell your product.
.
Submit three reports: two intermediate reports (on the product and on its
manufacturing), and a final, comprehensive report.
Detailed Requirements
1st Report: Product Design and Market Analysis
This report should cover the following items:
1. Describe Your Product, and Explain the Rationale of Selecting it
.
Elaborate on the advantages of your product and its fit to mass customization
or personalization markets.
.
Elaborate on the desired features that differentiate your product from similar
competing products.
.
Search patent databases (see at the end of this section) and report on similar
inventions.
2. Describe the Market of your Product and the Customers
.
What is the total market value of products of this type?
.
What is the market share that you expect to capture?
.
Who are your customers?
3. Provide Sketches and Specifications of the Product
.
Elaborate on key design ideas allowing cost-effective variations of your
product (e.g., modularity).
.
How many variations can customers choose from?
.
Can you classify components of the product as strategic and non-strategic?
4. Why Would the Customers Buy Your Product?
.
What needs do the customers have that your product offers?
.
Can you conduct a small market survey to prove your claims?
.
How do you know that your planned price is right?
.
What differentiates your product from your competitors?
2nd Report: The Manufacturing System
This report should elaborate on the design of the production system and cover the
following points:
1. Production System Description and Investment Cost
.
Describe the system type and its configuration and floor layout as well as the
type of equipment needed.
PRODUCT DEVELOPMENT IN A COMPETITIVE GLOBAL ENVIRONMENT 387
.
Elaborate on equipment flexibility and reconfigurability.
.
Explain how the system can manufacture the different product variants.
.
Estimate the investment cost for the equipment and the facility (get quotes for
equipment).
2. System Performance
.
Determine the production time per product and the throughput of the system.
.
Elaborate on convertibility issues (changing between product models to
satisfy customer’s needs).
.
Elaborate on production capacity and scalability issues (adding capacity).
3. Transferring Customer’s Needs to the Manufacturing System
.
Discuss how current customer needs will be translated into the production
of customized products by the manufacturing system.
.
Estimate the time from order to delivery to the customer.
.
If relevant to your product, discuss special equipment and methods that
enable the measurement or estimate of customer requirements (e.g., partic-
ular size of jeans) for the customized product.
4. Self-manufacturing Versus Outsourcing
If you use outside suppliers to supply components (outsourcing)—explain why
and elaborate on the issue of just-in-time delivery of these components.
BUSINESS TOPICS IN THE FINAL REPORT
The final report and its oral presentation are based on the previous intermediate reports
and, in addition, should include the following business-related topics:
1. Competitive Advantage
.
Market analysis.
.
Do you compete on cost leadership, product differentiation, or personali-
zation? Explain.
2. Creating Value for the Customer
How do the customers benefit from your product?
3. Strategic Resources
.
List and explain your resources. Are they unique?
.
Elaborate on your core competency that can create the competitive
advantage.
4. The Business Strategy
.
Market target and scope; global growth strategies.
.
How are your strategic resources helping you to define the business
strategy?
.
Marketing strategies; rapid response to customer orders and needs.
388 APPENDIX D TERM PROJECT: PROJECT DESCRIPTION AND REQUIREMENTS
.
Using the web and information technology in marketing and responding to
customers.
.
Product distribution and delivery methods.
.
Outsourcing and supply chains.
5. Selecting the Location of the Production Facility Compare possible loca-
tions such as the USA (where?), China, India, Central America, Mexico, etc.
6. Company Organization
.
The organization structure of the company; number of employees; the
decision-making authority.
.
The workforce size and skills.
.
Possible strategic alliances and cooperation with partnering companies.
7. Financing
.
Plot a chart of your proj ected sales (for best and worst scenarios) versus
expenses (investment and operational) projecting forward up to 7 years;
discuss break-even points. How much money do you plan to raise to start your
company?
FINAL REPORT FORMAT
Cover Page (title, student names, date, group number)
Table of Conten ts
Executive Summary (1 page)
1. Vision and Rationale for selecting the product (company goals, how to
achieve the goals)
2. The Product (describe your product and its uniqueness; based on the 1st
report)
3. Manufacturing System and Infrastructure (based on the 2nd report)
4. Competitive Advantage (elaborate on your competency that creates a market
advantage)
5. Business Model (market analysis, creating value for customers, strategic
resources, the business strategy, responding to customers, supply chains,
outsourcing, etc.)
6. Management and Organizational Structure
7. Basic Financial Plan (estimate investment and operational costs vs. sales in
worst- and best-case scenarios for the first 7 years)
8. Summary
Attachments
The final report size is limited to 30 pages, not including product and plant layout
drawings.
FINAL REPORT FORMAT 389
Submit:
.
One hard copy of a nice, bounded booklet
.
An electronic copy (MS Word) on a CD.
For the 1st report you should look for similar concepts and ideas at patent
databases.
Patent Databases
U.S. Patent Office: www.uspto.gov/web/offices/pac/doc/general/
IBM: www.patents.ibm.com/
European: www.epo.co.at/index.htm
390
APPENDIX D TERM PROJECT: PROJECT DESCRIPTION AND REQUIREMENTS