MAKE OR BUY DECISIONS IN A MANUFACTURING UNIT

Group No. 1

Group no.1 Members:

Parul Sharma (1) Akanksha Pande (11) Nishidha Narayan (21) Neha Roy (31) Devyani Kute (41) Neha Saxena (61)

What is a manufacturing unit?

It is a:
Place

which converts raw materials into finished / unfinished goods through various processes. Plant consisting of 1 or more buildings with facilities for manufacturing

What is MANUFACTURING?

 It

is the use of machines, tools and labor to produce goods for use or sale. May refer to a range of human activity and is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing aircraft, household appliances ,automobiles,or sold to wholesalers,retailers, who then sell them to end users the "consumers".

ADVANTAGES OF MANUFACTURING

source of jobs trade surplus development of new technologies greater responsiveness to customer demands faster turnaround times reduced waste levels and downtime improved product design and quality

 greater

potential for a wider product range streamlined relationships with suppliers and customers

Disadvantages of manufacturing

 Need

to invest in manufacturing facilities it is more economical to buy items like tyres and roller bearings. supplier may have greater technical expertise in manufacturing an item total operations and organization becomes too big to be managed effectively and efficiently if every thing is manufactured

CONCEPT OF JUST-IN-TIME (JIT)

Also called lean production Rather than producing goods and supplying customers from stock, JIT processes focus on producing exactly the amount you require at exactly the time your customers require it.

BENEFITS OF JIT:

Improves production efficiency by: Preventing over-production Minimizing waiting times and transport costs Saving resources by streamlining your production systems Reducing the capital you have tied up in stock Dispensing with the need for inventory operations Decreasing product defects

DISADVANTAGES OF JIT:

 May

be difficult and expensive to introduce. Opens businesses to a number of risks Supply Problems High Cost of Implementation Lack of Acceptance by Employees Customer Dissatisfaction Problems

List of top manufacturing companies of India

 Larsen

& Toubro: Biggest Indian construction and engineering conglomerate Hindustan Unilever Network: One of the leading manufacturing companies in India Bombay Dyeing : Wadia Groups flagship and a leader in textile industry Aditya Birla Group : Is in the league of the top Fortune 500 companies

OUTSOURCING

It refers to: Allocation of specific business processes/function to a specialist external service provider Obtain good and services from an outside supplier Also called as offshoring Tends to be a longer term decision with the largest loss of control

What is Sub-contracting?
It

is done on your site and under your management control It is different from outsourcing because outsourcing is done off site at the outsourcers facility under their management control

Most commonly outsourced streams of business are:

Web design and maintenance Recruitment IT Maintenance Logistics Manufacturing Technical customer support

Why organizations outsource their business processes?

 Lack

of expert labor in some portions of business processes Availability of cheaper labor without compromising on the quality of the output Ability and feasibility to concentrate on other crucial business processes

ADVANTAGES OF OUTSOURCING

Swiftness and expertise: Concentrating on core processes rather than supporting ones Risk sharing Reduced operational and recruitment costs Reduces training expenses and time Increased efficiency Level the field and look bigger than you are

DISADVANTAGES OF OUTSOURCING

Risk of exposing confidential data Synchronizing the deliverables Hidden costs Lack of customer focus Lower Standards Community Outrage Communication

KNOWING WHEN TO OUTSOURCE?

Following criteria can be considered to decide: The activity is not a core process The job is a routine one that wastes valuable time and energy The task is a need thats is only temporary or that recurs in cycles Its less expensive to have someone else do it than to do it in-house

 The

activity can be done cheaper in-house but drains resourced that could be better used elsewhere The skill requires is so specialized thats it is impractical to have a regular employee do it The activity is not the one that people are enjoying

 What

is the duration? Will confidential information be disclosed Does the company want close management of day-to-day activities? Does the company have the staff now or would it need to hire them?

FACTORS TO CONSIDER BEFORE OUTSOURCING

Asking each other for a profile or a resume prior to signing any agreement All financial and performance conditions should be clearly stated in the written agreement.

HOW TO SELECT YOUR OURSOURCING VENDOR?

Auto adjusting to real time changes Flowing with your business Business growth calls for more synchronized efforts Catering similar industry as yours Anticipation and accommodation Service synchronization at a heavy premium is a let down

MANUFACTURING V/S OUTSOURCING

It will depend upon the following factors: Capability of manufacturing Capacity of manufacturing Availability of raw material Scale of economy Governmental policies , law and order situation Availability of power ,water , infrastructure Capital/investment

ECONOMICS POINT OF VIEW

PROFIT

FIRM
UTILITY STAFF

=TR-TC Prof are max when

Q=TR/Q - TC/Q = 0

When this is met,org manufactures else it outsources

PROFIT MAXIMIZATION

Satisfaction from goods by labor

If right skilled of labor are there,manufactuing else buying

UTILITY MAXIMIZATION

Large no of subordinate staff

If enough no of staffs are there then org manufactures, else outsources

STAFF MAXIMIZATION

Role of HR in a manufacturing firm

Some role and responsibility of HR persons are:

monitoring

and controlling on attendance, salary and wages new employee induction program training and development exit interview arranging interview for vacancy position grievances handling works

THANK YOU