OPERATION MANAGEMENT

Operation Management



Abstract

The dynamics of workforce skill levels has a considerable impact on plant-level performance that is commonly overlooked by managers of manufacturing operations. In this study, we present a discrete event simulation model inspired by and validated in an actual manufacturing setting that includes short product life cycles, mid-volume production quantities, and a production environment consisting of assembly, inspection and testing. The effect of worker skill dynamics is analyzed using a factorial experimental design that contrasts the use of temporary versus permanent workers on manufacturing cost performance. The manufacturing costs reviewed comprise labour, inspection and testing. The cost of reworking a defect is captured as an increase in the labour consumption.

Table of Content

Part 14

Low-wage temporary worker productivity5

Low-wage temporary workers and quality management6

Part 27

Technology Development7

Part 38

Layout for Assembly Operations8

Build station work9

Post-build station work10

Deployment policies11

Performance measures11

Part 413

References16

Operation Management

Part 1

Staffing mix is a key decision variable in manufacturing strategy. In an environment in which demand is highly cyclical or volatile, temporary workers can be used to smooth production. At Worcester hand Tools, however, customer demand for the products often exceeds the production capacity of the manufacturing operation, and therefore, the use of temporary workers for volume flexibility is generally not a consideration, as the plant operates at maximum capacity. Instead, Worcester hand Tools (like many other firms) hires temporary workers directly from local labour pools in order to lower variable manufacturing costs. These “direct-hire temps” generally have limited education, possess little if any manufacturing experience, and may not be fluent in English. Following, we question whether using temporary workers really reduces production labour costs.

There are many “hidden factory” costs associated with their use: for example, traditional accounting costs fail to properly consider the reduction in effective capacity due to lower productivity. The length of employment and reducing the processing capacity of the temporary workers are generally not allowed to move as far as the learning curve than permanent workers and, in turn, increases the average processing time necessary for them to complete a task. Furthermore, the lagged effect of workforce learning on output may be underestimated (Adler, 1991, 267).

Also omitted from traditional production labour cost calculations are the differences between permanent and temporary workers' influence on product quality. Since direct hiring of temporary workers generally have less training and lower-level skills, and usually lack depth and experience in total quality management (Kaizen) methods, not only have higher defect rates than permanent workers, but are also less likely to engage in routine continuous process improvements (Argote, 1999, 74). Previous researchers have demonstrated that quality often has a learning curve effect similar to that of processing times.

This in turn affects quality costs, including first pass yields, scrap, and warranty costs. Related literature specifies that worker distinctiveness and the assignment of shop floor employees may have an influence on these hidden costs. In addition, research on learning of the workers has shown that production planning based on simple averages of rates of learning capabilities and provides estimates of manufacturing ...