Optimizing The Order Processing of Customized Products Using Product Configuration
Optimizing The Order Processing of Customized Products Using Product Configuration
Published in:
Production Engineering
Publication date:
2011
Citation (APA):
Hvam, L., Bonev, M., Denkena, B., Schürmeyer, J., & Dengler, B. (2011). Optimizing the order processing of
customized products using product configuration. Production Engineering, 5(6), 595-604.
https://doi.org/10.1007/s11740-011-0334-x
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Optimizing the Order Processing of Customized Products Using Product Configuration
L. Hvam 1, M. Bonev1, B. Denkena 2, J. Schürmeyer 2, B. Dengler 2*
1
Department of Management Engineering and Operations Management, Technical University of Denmark,
Produktionstorvet, Building 426, room 41, 2800 Kgs. Lyngby, Denmark
2
Institute of Production Engineering and Machine Tools, Leibniz Universität Hannover, An der Universität 2,
D-30823 Garbsen, Germany
*corresponding author: [email protected]
Abstract
For the b etter part of the 20 th century many large companies have b een focussed on optimizing their mass
production process as a way of maximizing their profits. Nowadays, in the existing environment of glob al
competitiveness, enhancing the production process remains a significant issue as well.
Product configuration b ased on integrated modular product structure and product family architecture has
b een recognized as an effective means for implementing mass customization. In order to evaluate the
effects of product configuration on order processing, a study has b een conducted b y the Department of
Management Engineering and Operations Management of the Technical University of Denmark in
cooperation with the Institute of Production Engineering and Machine Tools of the Leib niz Universität
Hannover. Thereb y, a product configuration system has b een modelled for a manufacturer of mass
customized products and its b enefits for the order processing have b een evaluated.
Keywords
Product management, Product configuration, Order processing
(IVCS) to facilitate customer and order processing based object-oriented project life cycle (analysis, design,
on information from multiple domains in a mass implementation and maintenance), the introduced
customization environment. IVCS is based on approach further contains methods for analyzing the
combinations of selective and generative rules and business processes to be supported by the configuration
supported by a comprehensive ontology framework [17]. systems and proceedings for analysing and modelling the
Like product configuration systems , Product Data product range [3]. By following the defined steps, the
Management (PDM) systems handle the documentation, methodology facilitates the development of product
availability and the updating of data originated from the configurations. As shown in figure 1, first the specification
technical office, such as designs, BOM and simulations. In process has to be defined (phase 1), after that the product
particular, PDM systems were created in order to support range needs to be analyzed (phase 2), then an object-
interfaces between different departments of a company. oriented analysis (OOA) model of the product
While the PDM is mainly meant to manage engineering configuration should be constructed (phase 3) and a
product data, the product configuration system supports configuration system has to be chosen, in order to adapt
sales processes and connects them to the engineering the OOA-model (phase 4). After the requirement
and the production [1, 18, 19]. specifications have been specified, the next steps consist
of programming and testing (phase 5) and implementing
For example, JIANG et al. propose a new approach to (phase 6 the configuration system in the future
inventory shortage driven optimization for product specification process). Finally, the performance of the new
configuration variation based on genetic algorithms. The specification process should be measured and the
approach adds impact costs, lead times and inventory configuration system needs to be adjusted accordingly
factors to the traditional configuration optimization model (phase 7).
and considers the effects on other orders when a
component changes [20]. ELMARAGHY et al. study the The following subchapters describe the developing
effect of product modules structure on the corresponding process of a product configuration system for a
globally distributed supply chain configuration. An integer manufacturer of mass customized products. This case
linear decision support model is developed to determine study has been conducted according to HVAM´s
the optimal location of global supply chain nodes by framework and shows how product configuration could be
simultaneously considering the current exchange rate at used for optimizing order processing. Moreover, the
various sites and the optimal modular product structure to impact of product configuration on order processing has
be used in order to minimize the total cost [21]. been evaluated.
OVERMEYER et al. use data mining in order to predict 3.1 Phase 1: Development of specification process
performance figures of alternative system configurations
of manufacturing technologies. Using the performance In phase 1 the most important specification process es
need to be identified, correspondingly, the requirements
figures different configurations of a system could be
for the individual specification process es have to be
assessed and compared during the bidding phase [22].
formulated as well and compared to the present
performance. Furthermore, a new specification process
3 EFFECTS OF PRODUCT CONFIGURATION ON
ORDER PROCESSING has to be designed.
Present processes, aims and requirements
HVAM defines a comprehensive seven phase procedure
for developing configuration systems. Based on the The analysis of the specification process es aims at
defining the specifications necessary to ensure that the process starts when the customer accepts the quotation
ordered products are delivered in the right place at right offer, which means that it begins with the ordering activity
time and in the right condition. A good starting point when and ends with the customer receiving the product. The
analyzing the process is to identify necessary shipment of the product is therefore included in the
specifications in the product life-cycle and then to process. However, the shipping service is bought from an
investigate activities used to generate each of them. external company. Becaus e of difficulties in estimating the
This study was done in a close cooperation with a value adding time of the shipment, it was decided that the
company that manufactures mass customized goods. value adding time would be the shortest amount of time
Being a leading global provider of equipment and needed for the product to be shipped. Any time which
industrial systems, the company possesses advanced exceeds that is estimated as non-value adding.
technological know-how, but struggles with the handling of The most important VSM measurements are illustrated in
some of his business processes. The product chosen for table 1. The measurements show that an expected order
evaluation is sold through Sales Support Units (SSU) fulfilment time is 22,83 days. However, the standard
located worldwide. The customer orders the product deviation in the order fulfilment process is 23,20 days,
through sales people working for the SSU (figure 2). The which means that the order fulfilment can take up to more
sales process most often begins with the customer calling than twice as long. The measurements of the specification
the salesperson and asking for products or with the process show that 18,54 days pass from the moment
salesperson contacting the customer and adverting new when the salesmen make a quotation to the customer
ones. until the production can start. Approximately 9,77 of these
The salesperson typically uses product brochures and days are due to time waiting for the customer to respond
manuals to educate the customer on the solutions the to the quotation offer, however, 8,35 days are explained
manufacturing company has to offer. Since product by waiting time in the manufacturer´s processes. The
variants have already been defined in the pricing result is that only a 0,45% of the specification process
spreadsheet, the order decoupling line is customized to time is value adding. The standard deviation of the
delivery, i.e. the customer selects between predefined specification process is 24,92 days. The time that has
alternatives of the product and can then define passed before the production starts is therefore
customized delivery options and payment agreements. If unpredictable.
the customer is interested in buying a particular product,
the salesperson consults the pricing list and makes an Total time Order fulfillment Specification process
unofficial offer. If the customer feels that the offer is
T [h] 32,85 22,83 18,54
reasonable, they reach an agreement.
The Value Stream Mapping (VSM) technique was used in VT [h] 2,74 2,68 0,08
order to investigate the value adding time of the Std [h] 36,50 23,20 24,92
specification processes, production and delivery (figure 3). WT [h] 28,62 18,85 18,12
There, the VSM is divided between activities, presented
VT [%] 8,34 11,73 0,45
by arrows and waiting times that separate the activities,
presented by triangles. The measurements shown in the T: Time duration; VT: Value adding time; Std: Standard deviation; WT: Waiting time
VSM are the average time the activity/waiting takes (T),
the value adding time (VT) and the standard deviation of Table 1: Results of VSM measurements
the duration (Std.). The time at the waiting station is never The time measurements of the product specification and
calculated as a value adding activity. The specification the order fulfilment give a good idea of which non-value
process begins with the specification activity and lasts adding activities the process contains in a relative
until the production start is arranged, i.e. the right bill of perspective to the value adding activities , pointing out
material (BOM) has been found and adjusted and the where improvements would be most effective. The largest
order is ready to be processed. The order fulfilment
office involve various non-value adding elements. The T: Time duration; VT: Value adding time; Std: Standard deviation; WT: Waiting time
productivity of employees can be improved by automating
activities in the specification processes . Furthermore, the Table 2: Results of VSM measurements
standard deviation of the duration of the processes can be
reduced further by avoiding errors thus ensuring better 4 SUMMARY AND CONCLUSION
quality of information and documents. However, it is In order to evaluate the effects of product configuration on
recognized that the waiting time in the process, i.e. time order processing, a study has been conducted. Thereby,
when the order is waiting to be handled between a product configuration system has been modelled for a
activities, is usually significantly more time-consuming manufacturer of mass customized products and its
than the non-value adding time during the activities. benefits for the order processing have been evaluated.
Therefore, by either combining processes or by
The case product family and the interdependences
eliminating processes with automation, some of the
between the components have been modelled and
waiting stations could be eliminated.
programmed in a standard configuration system.
It is an objective of the product configuration to decrease Additionally, data regarding price and product
the non-value adding activities and to shorten the duration identification have been added to the components
of the process. Having reached the target performances , enabling the creation of a quotation letter which