2.2 Process MappingProcess mapping is the charting of a process in order to comprehend all the activitiesand their relationships. There are various types of charting methods inuse, why this section will describe the most common ones. Process mapping canbe an extremely time-consuming activity, but the potential gain in knowledgeand understanding can be correspondingly high. In order to gain maximumbenefit from process mapping, two issues have to considered: 1) Choice of mappingtools and 2) converting the descriptive nature of a process map into ananalytic tool.At the beginning of a mapping activity some key elements have to beacknowledged. The first is the degree of detail within the process map and thesecond is – the appropriate mapping symbols and structure.In order to convert the process map into an analytic tool some generalquestions can be asked:• Intensions of the process?• Does the process add value?• Who has the responsibility?• How is the visibility?• How is the efficiency?• Can we improve the process?2.3 SIPOCSIPOC is a process mapping tool used mainly to map the input and outputsand summarize processes in a table. In manufacturing it is used as part of sixsigma, lean, kaizen or process management or the “Define” part of DMAIC,which reflects its use in this report. It is also a tool that can illustrate a processand reduce the intricacy of an otherwise complex process.7 Before changingthe process it is important to know the process this is where the SIPOC-modelis useful, even if a process varies from employee to employee. SIPOC is anacronym for Suppliers, Inputs, Process, Outputs and Costumers.• Suppliers are the providers of the inputs.• Inputs are what will be “processed”. These can be hardware, services orinformation.• Process are taking the Inputs, adding value to them, and creating anoutput with a sell-on value.17• Outputs are the hardware, services or information on which a profit canbe made.• Customers are the clientele where one expects to sell Outputs.Figure 2.2: SIPOC model6The SIPOC-model should quite quickly give a high level overview to anyonewho is not familiar with the process, help to discover new processes, and canmake people aware of changes in the process. From the SIPOC-model, one canderive a simpler version of this tool called the IPO-model, the IPO-model onlyfocuses on the Input, Process and Output, because it cuts out the suppliers andcustomers. In our project the IPO-model will be used, because our focus mainlywill be on the process, from input to output.2.4 Pareto chartA Pareto analysis is a method of classifying items, events or activities relativeto their importance. 13 A Pareto analysis is based on what is known as thePareto principle or the 80/20 rule. This rule states that roughly 80 percent of alleffects, stem from roughly 20 percent of the causes. This principle could in ourcase be interpreted as 80 percent of all 3D print defects, stem from 20 percentof failure factors. The idea behind this principle is to separate the critical fewfrom the trivial many, and in effect it helps one focus on the few things thathave the most impact.To perform a Pareto Analysis, one must first collect a set of data and sortit in a descending order using a table that could look like the following:Causes Frequency Cumulative %CumulativeabcdeThe list of factors within the table should be sorted by ones that are mostfrequent at the top and the ones least frequent – at the bottom. With this inplace, one can proceed to construct the Pareto Chart. The Pareto chart is one18of the seven basic tools of quality, and helps visualize our data. Beneath, anexample of a Pareto Chart is shown (Figure 2.3).Figure 2.3: Example pareto chart14The left response axis displays the empirical occurrence rate of a causeand the right axis displays the cumulative rate. The x-axis lists all the causesobserved during the experiment. On the actual graph we see two different typesof visuals: a bar chart and a line chart. The bar chart is tied to the empiricaly-axis and the line chart represents the cumulative percentage of occurrences.When the Pareto Chart is constructed, the critical few causes can easily bedistinguished. If we look at the 80 percent mark on the right response axis, wecan see that, in this example, A and B account for roughly 80 percent of theoccurrences, which means these 2 causes have the biggest impact on the failurerates (Figure 2.4).Figure 2.4: Example pareto chart142.5 Capacity planningCapacity planning concerns with the foreseeing of which kind of capacity willbe required in the future. It is also about deciding which sort of strategy to usedepending on the product or service. In general three strategies exist:Leading Build capacity in anticipation of future demand increases19Following Build capacity when demand exceeds current capacityTracking Similar to the following strategy, but adds capacity in relatively smallincrements to keep pace with increasing demand.A company’s choice of strategy is widely dependent on the current state ofthe company. If the company currently has a high financial capital, choosing aleading strategy could be the most viable. However, if the company is alreadylow on resources, trying to build capacity in anticipation of increased demandcould hurt the company because of having overcapacity before the demand actuallyincreases. In the same sense, using a following strategy can work whenthe company is uncertain of the level of future demand, or there is a lack ofcapital. The danger is that this can lead to loss of customers and ultimately bedetrimental to the growth of the company.In the same vein, the strategy chosen is not only limited by finances, butalso by which type of production or service the company offers. A companyoffering a monthly supply of products may not be able to increase their capacityincrementally without committing to a more substantial investment in capacity.However, a company such as a taxi service may simply be able to hire 5% moredrivers and/or buy 5% more taxis.Certain formulas and terms are relevant when talking about capacity andcapacity planning. Design capacity is the maximum output rate or servicecapacity of an operation, process or facility, i.e each printer at northern layerscould have a design capacity of 24 hours worth of printing per day, and in turn,their total design capacity would be the amount of printers multiplied with 24hours worth of prints per day.Effective capacity is design capacity minus allowances such as personaltime, maintenance, and scrap. In Northern Layers example that would be the24 hours per printer minus the time required to scrape the prints off of the printbed and other maintenance.Actual capacity is the rate of output actually achieved the actual timeduring which printers are printing and producing value per day.2.6 Cost-Volume-ProfitThe objective of this part is to provide decision makers with a better understandingof the risk associated with the decisions that they make. The Cost-VolumeProfit(CVP) is based on the classification of variable, fixed and mixed costsin order to identify the profit associated with different levels of manufacturingactivity. Important keywords are marked in bold throughout this section.Variable costsA variable cost is one that increases proportionally with the changes in theactivity levels of some variable. A common term used to describe such variables20in relation to cost is cost driver. The variable cost equation is as follows:Variable cost = Variable cost per unit of cost driver × cost driver units (2.1)Fixed costsOn the other hand, fixed costs which, in the short run, is not related to theamount of activity but relates to the acquired ressources. Therefore, fixed costsare often referred to as capacity-related costs.Mixed costsA mixed cost is one that both has a variable component and a fixed component.We can now describe the total costs with the following equation:Total cost = Variable cost + Fixed cost (2.2)Another aspect of the CVP analysis is the profit, which can be described as thedifference between the total amount of revenue and the total costs:Profit = Revenue + Total cost (2.3)Where the revenue can be described as follows:Revenue = Variable cost × Units sold (2.4)We can now introduce the term Contribution Margin which is the differencebetween the total revenue and the total variable cost. Contribution margin perunit is the contribution that each unit makes to cover the fixed cost and therebyprovide a profit. Contribution margin ratio is the fraction of each sales dollarthat is available to cover fixed costs.We can now derive the following general CVP equation:Profit = Contribution margin per unit × Units sold ? fixed costs (2.5)A common use of this equation is to calculate the break-even volume. Thiscalculation answers the question of how many units have to be sold in order toreach a target profit. Break-even refers to a target profit of 0. This is where thecontribution margin equals the fixed costs hence the general CVP equation.The CVP analysis will form the basis for the financial modeling. Thissection reviews basic cost definitions, but more complex cost behavior can bemodeled as well using a spreadsheet. We can expand the concept of variableand fixed costs with other useful cost definitions such as manufacturing costs,incremental costs, sunk costs and opportunity costs.21Manufacturing costsManufacturing costs are typically classified into three categories: Direct materialscosts, direct labor costs and manufacturing overhead costs. Both thedirect materials costs and direct labor costs are treated similarly and includesthe costs of material and labor that can be easily traced down to one unit ofproduction output while still having a significant financial impact to the finalproduct. If the financial impact of the materials or labor is insignificant to thetotal costs, the costs is normally included in the manufacturing overhead costs,which includes all costs that are not a part of the direct materials costs or directlabor costs but still is incurred by the facilities.Incremental costsAn incremental cost is the cost of the next unit of production. Normally, theincremental cost is equal to the variable cost of a unit of production. In caseswhere the variable costs of a unit of production is changing due to changes inproduction activity or if the variable costs are a step variable, the cost of thenext unit of production does not equal the variable cost of a unit of production,why we need to introduce this term.Sunk costsA sunk cost is a cost which cannot be recovered from a previous commitment.The term is used to describe decisions that cannot be changed. An importantnotion here is to emphasize that sunk costs should not be considered insubsequent decisions.Opportunity costsOpportunity cost is a term used to describe the potential maximum value thata course of action will potentially lose. The term differ from the other costdefinitions by not representing a cost incurred in the production facilities, butrather represent a loss of potential profit.32.7 Overall Equipment EfficiencyOverall Equipment Effectiveness (OEE) is the gold standard for measuring manufacturingproductivity. Simply put it identifies the percentage of manufacturingtime that is truly productive 9. The rate is setup as so; 100% being theperfect production, meaning the manufacturing is produces good parts 100%of the time, and in the fastest time possible. in order to properly use OEE itis important to know what is a good and what is a bad OEE. The followingpicture will strive to explain the interaction between OEE and waste, and whatresult this might yield. The OEE is calculated with the amount of products22without defects, multiplied with the ideal cycle time, which is the fastest possibleproduction time for one product and it is then divided with the scheduledplanned production time.Figure 2.5: Some different levels of Overall Equipment EffectivenessThe OEE is calculated with the amount of products without defects, multipliedwith the ideal cycle time, which is the fastest possible production timefor one product and it is then divided with the scheduled planned productiontime.OEE = Good count × Ideal Cycle TimePlanned Production Time (2.6)Furthermore the OEE can be divided into 3 subparts; quality, performanceand availability. These are all also measured in percentage.Quality: Is measured in percentage, if the production yields no defectiveparts then that would give a 100% quality. The quality is found by taking thegood count and dividing it with the total count.Quality = Good countTotal Count (2.7)Performance: Is the most difficult to measure, it is the pace of which theproduction can run at, so if the production works as fast as possible it wouldgive a 100% performance. It is calculated by finding the ideal cycle time for oneproduct, then multiplying it, with the total count of products, to find the netrun time, this is then divided with the actual run time, giving a performance inpercentage.Performance = Ideal Cycle Time × Total CountRun Time(2.8)Availability: Is the amount of idle time both planned such as changeover timeand unplanned like failed prints or filament shortage. So, if a production runswithout idle time, this would yield a 100% availability. It is calculated as theratio between run time and planned production time, whereas run time is theplanned production time minus the stop time.Availability = Run TimePlanned Production Time (2.9)23The ideal OEE with a score of 100% would yield a perfect production withonly good parts, as fast as possible and with zero idle time.122