Computer integrated manufacturing in small companies: A case study

Computer integrated manufacturing in small companies: a case study A.C. Caputo Faculty of Engineering, University of L’Aquila, Monteluco, L’Aquila, Italy G. Cardarelli Faculty of Engineering, University of L’Aquila, Monteluco, L’Aquila, Italy M. Palumbo Faculty of Engineering, University of L’Aquila, Monteluco, L’Aquila, Italy P.M. Pelagagge Faculty of Engineering, University of L’Aquila, Monteluco, L’Aquila, Italy

A methodology for introducing computer integrated manufacturing (CIM) technology in small companies has been developed. With the aim to assess the capabilities in real applications of the proposed approach, a case study is presented in this paper. The case study refers to a small Italian company (Italpneumatica Sud) producing pneumatic components under one of the leading trademarks in the world (SMC). Results of first experimental tests demonstrate ability of the developed methodology in improving overall company performances, maintaining at the same time low implementation costs.

Industrial Management & Data Systems 98/3 [1998] 138–144 © MCB University Press [ISSN 0263-5577]

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1. Introduction Computer integrated manufacturing (CIM) technology provides companies with an excellent opportunity in order to compete in the present global context. The actual situation also favours small companies in developing and implementing CIM applications, due to many concurrent factors (de Venuto et al., 1994; Gupta and Brennan, 1995): • availability of low cost hardware and software tools, with better performance and quality, makes CIM solutions accessible even to limited budget companies; • technical improvement in the fields of networking and personal computers allows for reliable distributed information systems, providing the opportunity to use an affordable step-by-step approach while safeguarding integrity; • increased awareness, at management level, of the competitive potential offered by CIM solutions; • actual turbulence of markets requires small companies to continuously increase performance, such as production flexibility, timely purchasing and delivery, process and product quality, in order to avoid the risk of quickly being overshadowed by more farsighted competitors. As a consequence, the introduction of CIM technologies may represent, particularly for small companies, one of the most promising strategies to acquire and maintain a competitive edge, from product development to marketing and distribution. In this paper a case study is presented concerning CIM introduction in a small company (Italpneumatica Sud) working in the area of pneumatic components with the trademark SMC (one of the leading producers in the world). Like many other smallmedium-sized companies, Italpneumatica Sud has to solve integration problems on a limited budget.

The strategic requirements to be met are as follows: • need to guarantee customer service by reducing lead times: this involves timely information, accurate delivery times and a reliable logistic system; • need to guarantee product and process quality: this requires accurate operations and process control to make quality certification possible (EN 29000); • need to guarantee the setting up of a safe and timely corporate information system able to supply each user with online data required for operational and decision-making procedures. The approach taken to develop the CIM application is based on four main phases (de Venuto et al., 1994): 1 development of a general concept considering a top-down approach, aimed at outlining a consistent overall scheme; 2 breakdown into modules, still based on a top-down approach but managed by tackling limited problems and operating areas; 3 gradual implementation based on bottomup approach, having computerization as a goal; 4 integration based on a bottom-up approach, aimed at recreating the initial innovation framework. In the paper the global information strategies and the functional objectives have been defined, in order to implement them in small steps later on. Bearing this in mind, preliminarily a detailed analysis of the actual procedures, operating routines and production organization has been carried out. As a result, the poorly structured activities have been characterized. Then a redesign of the corporate internal information networks has been performed leading back to the initial concept where the overall consistency of the project is checked. The proposed CIM system involves all corporate functions on a vertical level and all aspects of production on a horizontal level, that are medium- and long-term

A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study Industrial Management & Data Systems 98/3 [1998] 138–144

production strategic choices, operational management, manufacturing automation, interfacing with head office administrative procedures. Finally, the CIM architecture is described and the associated costs and benefits are discussed.

2. Production scenario The proposed methodology for developing CIM application is being implemented and tested in a small company (Italpneumatica Sud) producing a wide family of pneumatic components (mainly cylinders) of one of the leading world manufacturers (SMC). The company in question has been in operation since 1992 and has a workforce of more than 100 employees. The production volume is about 400,000 cylinders per year, forecast to triple in the next five years, subdivided among two main families (covering about 85 per cent of production) and five minor families. Its current year sales total about $15 million, shared between forecast orders for off-the-shelf products (40 per cent) and orders on demand (60 per cent). The manufacturing process can be subdivided into two main phases: parts machining and assembly. Some components require additional surface treatments, performed by external subcontractors. The main parts constituting a cylinder are the rod, piston and body or tube and end caps (Figure 1). These parts are manufactured by machining processes, such as turning, drilling, milling, sawing, lapping, rolling. The manufacturing department layout is organized in aisles dedicated to specified manufacturing processes, characteristic of a part of one or more product families. Three to six machines and one or more operators are present in each aisle. Inside every aisle, each machine is dedicated to a group of diameters. The assembly department layout is organized in lines, each dedicated to a product family. The

current information system is functionally depicted in Figure 2. It is based on a mainframe which carries out the usual administration and accounting tasks, as well as a support to production and warehouse management. In particular, the residing MRPII identifies the production orders to be released, and their due date, on the basis of customer orders and inventory control. The production planning function receives production orders and carries out a manual scheduling of activities based on both due dates and minimization of number of machines setup, providing the shopfloor with the manufacturing orders. These orders are then transferred to manufacturing aisles and assembly lines on order sheets. However, such orders do not represent a strict constraint to operators, who can change the actual lot scheduling without consent from the production planning function, which lacks real time control. As far as the engineering function is concerned, it relies on CAD instruments residing on mainframe for developing the computerized numerical control (CNC) part programs, that are successively stored in a floppy disk and transferred by means of a portable floppy disk reader into the CNC machines at the shopfloor level. Possible modifications to part programs carried out by the operators are communicated back to the engineering function only in a random fashion.

3. Main problems From the previous description it follows that the company essentially suffers from a lack of information exchange and integration between the various corporate functions, that needs to be filled on a limited budget basis. In particular, the main problems characterizing the present production scenario may be summarized as follows: • high throughput time;

Figure 1 Main parts of pneumatic cylinders

TUBE

BODY

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END CAPS

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• production management practically characterized by no scheduling; • excessive reliance on paper support for information exchange; • low level of process control; • scarce visibility of manufacturing process at management level; • accumulation of work in process inventory at shopfloor level; • stock levels not optimized; • actual production costs not foreseeable.

A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study Industrial Management & Data Systems 98/3 [1998] 138–144

Another important factor to be accounted for is the considerable market demand increase foreseen in the near future which will be faced by means of a significant extension of production capacity, currently in advanced development. In fact, a nearby new plant is near to completion, which will take the annual output from the current 400,000 cylinders to 1,200,000.

Figure 2 Current information flow

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4. Proposed solution The main objectives that have been pursued by the research programme can be summarized as follows: • an increase in customer satisfaction through lead time reduction; • introduction of total quality control procedures standardization in order to obtain ISO 9000 certification; • real time distribution of selected information in order to aid the decision-making process at every company level. The CIM implementation has been performed according to a twofold approach (Burggraaf, 1985; Chadha et al., 1994; de Venuto et al., 1994; Hultquist and Leighton, 1988; Sarkis and Lin, 1994; Williams et al., 1994): a top-down phase aimed at defining the global strategy and at pointing out the areas interested in CIM introduction, followed by a bottom-up phase in which the overall CIM concepts are gradually implemented, creating the desired scenario. In particular, the approach to be followed in the implementation of the CIM project is based on four main phases: 1 concept development, assuming a global top-down approach; 2 subdivision in modules, adopting a local top-down approach; 3 gradual bottom-up aisles integration comprising: • manufacturing aisles local integration; • computer assisted scheduling; • computer assisted assembly management (order management, product labelling, etc.); 4 global manufacturing aisles and departments internetworking to recreate the desired scenario. A functional schematization of the proposed CIM system is shown in Figure 3. In the proposed architecture, a production supervision personal computer (PSPC) is interfaced at the upper level with an AS400 Mainframe (MF). The PSPC is linked, at the lower level, with various departments in the facility (production, assembly, testing, warehouse). Moreover, production director PC (PDPC), engineering department PC (EDPC) and scheduling PC (SPC) communicate with PSPC. The MF sends PSPC the production orders to be filled (Figure 4), which can be classified into forecast orders for off-the-shelf products (either single stock parts or standard cylinder assemblies) and orders on demand (non standard cylinders, made from non off-the-shelf components and/or non standard assembly processes).

A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study Industrial Management & Data Systems 98/3 [1998] 138–144

The PSPC, in turn, sends back to MF information about production advancement (orders fulfilled and possibly completion of single manufacturing phases).

The orders coming from MF are reclassified according to group technology family by PSPC; then, they are sent to SPC on which resides a scheduling software in order to

Figure 3 Functional scheme of the proposed CIM system

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A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study Industrial Management & Data Systems 98/3 [1998] 138–144

obtain a real time updating of operational production planning (OPP) (Ashby and Uzsoy, 1995) (Figure 5). The SPC, in turn, transmits to PSPC the operating schedule, approved by the production planning manager (PPM), together with possible alternative schedules. These schedules are visible to the production director (PD) who can evaluate them on his PDPC together with the production advancement information. The PD can, however, change the OPP schedules, overriding the PPM decisions (Figure 6). Production scheduling, approved by the PD, is then sent to the proper manufacturing aisle, where a dedicated PC (manufacturing aisle supervision PC, MASPC) forwards the lot size and the suitable part programs (PP) to each computerized numerical control machine (CNCM) and oversees the working of the aisle (Hyumbo and Wysk, 1995; Odajuma and Torii, 1991). Each MASPC periodically updates the PSPC about production advancement, machines status (idle, working, on maintenance, failed, etc.) and scrap percentage. The presence of automatic measurement stations (AMS) enable the MASPC to manage the control charts for each machine (Figure 7). A global view of the CIM subsystems and information flow is given in Figure 8.

Figure 5 Information flow between PSPC and SPC Group Technology reclassified orders

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Figure 6 Information flow between PSPC and PDPC Schedule changes

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Production orders are sent by MF to PSPC. They are reclassified by group technology family, aggregated by parts and sent to the SPC which returns the OPP schedules. Such schedules are then approved, with or without modifications, by the PD. The PSPC interacts with the various local area personal computers located in each manufacturing aisle (MASPC), in the warehouse (WPC), in the assembly lines (ALPC), and in the testing department (TDPC), despatching respectively feasible machining orders, picking orders, assembly orders and testing orders. On their turn the local PCs return the PSPC information about start and completion of the assigned task.

5. Costs and benefits The present case study on CIM introduction in pneumatic components production represents a first experimental implementation of a project intended to bring about efficiency improvement in a small company oriented to global market. Even if some subsystems have not been completed yet, the new manufacturing system has clearly shown benefits that can be obtained introducing CIM concepts based on low cost hardware, but also on high level rationalisation and integration efforts. Going into more detail, the total cost of the project is about $1 million, which can be subdivided into the following main items: • problem analysis and concept definition $65,000; • software development and acquisition $165,000; • hardware investment $270,000; • project implementation, data collection and user training $500,000. The main benefit arising from the implementation of the described CIM system is the drastic reduction of delivery lead times due to the following factors: • introduction of effective scheduling techniques; • elimination of information flow on paper support; • greater control and visibility of the whole production system status; • capability of prioritising jobs (that cannot be scheduled to respect the delivery due date) that should be satisfied by residual internal capacity or relying on external subcontractors. The implementation of the new manufacturing system also allows for: • obtaining ISO 9000 certification; • improving the work environment;

A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study

Figure 7 Information flow between PSPC and MASPC

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Industrial Management & Data Systems 98/3 [1998] 138–144 Scheduled orders

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A.C. Caputo, G. Cardarelli, M. Palumbo and P.M. Pelagagge Computer integrated manufacturing in small companies: a case study Industrial Management & Data Systems 98/3 [1998] 138–144

• increasing control and integration of corporate functions; • optimizing stock levels; • reducing production costs. These factors enable the company to fully expand in the global market through the increased competitiveness arising from enhanced flexibility and quality certification.

6. Conclusions A methodology for design and implementation of a low cost CIM architecture targeted at small and medium companies is presented. In order to point out the effectiveness of the proposed approach in real applications, reference has been made to a case study in the pneumatic components area. In this kind of industry market forecasts, production planning and operation management are difficult as manufacturing of very small sized lots made with custom components is often required. Furthermore, the introduction of a corporate information network is often neglected due to limited budgets and human resources. In the case study, the CIM implementation was based on a cellular layout reorganization and the establishment of an effective information exchange structure between high level corporate management, the scheduling department and machining aisles/assembly lines, centered on a single production supervisor node. As a consequence, a low cost solution was developed with the aim to reduce throughput time considerably, reduce inventory levels and manufacturing costs, contributing to give even small companies a competitive edge. Experimental results of the presented case study confirm that, by adopting CIM as an approach, an increase in flexibility, quality and logistic performances may be reached also in small companies.

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