C. Describe Chrisler’s case.

D. Fill in the gaps with prepositions consulting the text and make your own sentences with the phrases.

1. to make things __ batches
2. to make things one __ a time
3. improvement __ quality
4. to replace something __ an alternative
5. to produce a something __ durable __ something
6. to earn an award __ innovation
7. to build quality __ the manufacturing process
8. to reorganize work __ existing capital
9. to be stuck __ the problem
10. to stem __ unusual background
11. to scale __ __ the approach

E. Match words consulting the text. Translate the terms.

cost	a) waste
consumer	b) costs
material	c) stream
floor	d) saving
supply	e) product
continual	f) space
hidden	g) flow

f. Paraphrase with synonyms:

1. to revitalize	2. to promote
3. inconsistent result	4. flawless part
5. to affect	6. consistency
7. durable	8. to adapt
9. kaizen	10. inventories

g. Define the terms in English:

1. mass production	2. batch
3. lean manufacturing	4. precision industry
5. kaizen	6. just-in-time inventory management
7. outsourcing	8. single-cavity molding

h. Study the pronunciation:aluminum, kaizen

I. Write the summary of the text in 100 words.

Speaking

Form several teams and brainstorm the following topic:Procurement in the era of globalization: “What used to be a matter of finding and purchasing goods and services at the most favorable price has changed. At some companies, procurement has become closely intertwined with strategic decision making and board policy at the highest levels of the organization.” Give arguments for/against ideas expressed in the quotation, support them with real examples.

Reading 2

a. Read the text and title it. Take notes while reading the text:

Overproduction
Reasons
Preventive measures

b. Answer the questions after reading the text:

1. What is cost based planning of production?
2. How can a mill influence the costs?
3. What are the basic reasons for overproduction?
4. How does overproduction make itself easy to identify?
5. What are the ways to resolve overproduction?
6. What is a KPI?

^[17]Changes in the market situation have dramatically changed the way paper industry works today. Major organizations are moving towards cost based planning, where production units inside one organization compete for customer orders. Orders are not directed toward a specific production unit but the order goes to the mill which is able to produce and deliver the goods in the requested time with the lowest cost.

This means that to receive an order in a modern supply chain, each production unit must keep production costs as low as possible and provide maximum flexibility. As individual mills cannot easily influence raw material or transportation costs, they need to concentrate on:

• Reducing working capital
• Reducing any extra operation costs such rework costs
• Increasing cost awareness by providing immediate feedback of production costs
• Keeping production plans as flexible as possible to allow late changes in scheduling for new urgent, highly profitable orders.

Luckily these objectives are not contradictory and can be achieved with business process changes in production planning and processes. The main target is to produce as timely as possible and produce exactly what is needed.

It is very typical in the industry for the final production numbers to be different from the original order. This happens for several reasons:

• The order tolerance is not totally clear for sales, planners and production.
• Seasonal variations influence length and diameter calculations which are not considered in ERP systems during order entry.
• Production does not always follow a planned diameter but still follows a planned number of sets.
• Winder operators only see the need for additional production too late, after the paper machine has already moved on to the next product. As a result, orders are under produced and the planner needs to take corrective action (rework).
• The paper machine tends to produce too much to compensate for possible waste in later production phases.
• Overproduction from a paper machine cannot be easily assigned to new orders, thus operators tend to do what humans always do: Follow the easiest path and simply overproduce already planned orders.

Typically, organizations react to over/under production by activating several programs which mainly try to get rid of already produced goods.

• Continuous weekly follow-up of old stock situation in the supply chain
• Use inventory teams to find target customers for free and old stock
• Activate production planners to utilize old stock for new orders.

Still, organizations seldom really try to overcome the root cause, mainly because existing Mill Execution Systems (MES) lack the proper tools to guide work in the paper machine and winder where major production decisions are done.

Starting with overproduction, the first goal in the battle against it is to make it visible as soon as possible. This creates immediately important benefits:

• Overproduction is immediately visible for production planners to be used for new orders
• Warehouse users will not store overproduction in the same location with original customer order (business rule)
• Overproduction is not accidentally sent to supply chain where relabeling and rewinder capacity is not easily available

Separate storing of overproduction will create extra work in warehouse, as operators need to find a new location for it or, alternatively, use clumsy mix locations. As a result we get immediate feedback; warehouse users will start complaining of overproduction to production operators, which clearly increases problem priority. A dedicated overproduction area in warehouse will also make problem easily visible to anybody walking around a mill warehouse.

The next step is to start influencing the root cause: why overproduction happens. As we have seen many times this is not always an easy task because of the nature of paper production. Machine chains can be long and produced waste is hard to predict. Finally, a long tradition exists in business to optimize pure paper machine production.

What to do next: If over/under production is as subject of concern, how should the mill approach the problem?

The first thing is to measure the existing process by key performance indicators using clear, mill-independent calculation rules. This data can be used to compare mills and to start understanding to which extent a problem exists. KPI's are calculated for each PM separately. The main KPI's to consider here are:

· Amount of free stock in warehouse

· Amount of stock which is older than a set number of days in the warehouse (tons)

· Over and under produced tons (compared with tolerances) relative to planned production volume (tons and%)

· How much overproduced volume has been used (reworked) for other orders after wrapping (tons and %)

· How much over/under produced volume has been sent to a customer or to an external warehouses (tons and %)

· Tons sent to customer a set number of days after or before latest mill ready date (tons and % of delivered amount)

Based on these figures, an idea if over/ under production is a problem on some production lines should already exist. Sometimes high numbers can be easily explained with business reasons, like repeatable business. Sometimes actions are needed.

The first step after finding an issue is to check that production planners, machine operators and production supervisors work together and understand each other. One good approach is for a production planner to move his/her working place to the winder operator's room for some period, e.g. one day per week, each time on a different machine. People then learn each other's tasks and start understanding why people work as they do. This kind of process can be a very eye-opening experience for both parties. As the process goes forward, the next step is to create a development program with a clear aim of reducing working capital and making production more agile by producing correct amounts as close to the planned delivery dates as possible.

This includes continuous and visible KPI follow-up, training sessions for key operators and often also changes to existing operating systems. New system support to calculate optimal PM jumbo reel size and early warnings of possible under/over production situations are essential requirements for a modern MES system.