QUOTATION PROCESS MANAGEMENT OF ONE-OF-A-KIND
PRODUCTION USING PSLX INFORMATION MODEL
Yasuyuki Nishioka
Engineering and Design Department, Hosei University, 2-17-1 Fujimi Chiyoda-ku, Tokyo, Japan
Keywords: Quotation process, Ontology, Standardization, Object modelling, Advanced Planning and Scheduling,
Supply chain, Bill of Materials, One-of-a-kind Production, Small Manufacturing Enterprise.
Abstract: One advantage of SMEs is flexibility for supporting one-of-a-kind production. In order to do this, quotation
process need to be managed appropriately by using ICT. This paper deals with production management for
quotation and collaboration processes of SMEs, which have huge variation and difficulty of information
integration. This paper shows two industrial case studies, and a typical model of quotation process. Then
PSLX information model, which is a result of standardization activities, is applied for supporting the
management. Finally capability of human-involved ICT is discussed as concluding remarks.
1 INTRODUCTION
Manufacturing industries nowadays have to deal
with the global emerging market by means of global
supply network spreading especially to the Asia
Pacific regions. Whereas mass production reduces
the production cost per unit in the new developing
countries, one-of-a-kind production is still necessary
in order to catch up the uncertain and unpredictable
market in the developing countries.
Production system for small lot size and large
variety is well researched and developed since 1980s
as the conventional FA (Factory/Flexible
Automation) and CIM (Computer Integrated
Manufacturing) technologies (McKay, 2004; Proud,
2007). Nevertheless, those processes are based on
the predefined variation. The new situation we are
facing today is that the manufactures cannot make
an appropriate plan of resources and capacities
before the order is received. This is caused by huge
uncertainty and luck of forecast capability.
Unexpected demands such as parts and
equipment for research-and-engineering, emerging
goods in early stage of product life cycle, supply
parts of discontinued products, and unusual
equipment for long life facilities are increasing more
and more in the current industries. Manufacturers
who take care of these diverse problems are not
large companies, but small manufacturing
enterprises (SMEs) who have their own network of
supporting industries.
It needs to be concerned that, flexibility and
quick response, which is the advantages of SME, is
based on the geographically close relationships. The
face-to-face negotiation of engineering specification
and quotation will be impossible in near future
because of the shift to the global production
environment. Information and communication
technologies (ICT) have to support such inter-
enterprise networking and negotiation processes.
To survive in this situation, SMEs should be
aware of ICT’s potential capability and use it in their
own ways. In other words, there is no standard
package for each SME, and no single method to be
applied. One-of-a-kind production or Engineer-To-
Order management is investigated in literatures (Xie,
2005; Angelo, 2010). In this problem, huge variation
of cases and difficulty of information integration
refuse easy implementation of ICT. Some theoretical
models can be applied for particular domain (Chen,
2003; Bidanda, 1998). However, models required by
actual ICT systems have enterprise-wide variation.
The practical approach we propose in this paper
is as follows. Instead of applying software packages,
SMEs should try to make their quoting system by
themselves using common data models and
Ontology. Then the proposed activity model of
quotation can guide their data processing
implementation.
This paper deals with production management
for quotation and collaboration processes of SMEs.
167
Nishioka Y..
QUOTATION PROCESS MANAGEMENT OF ONE-OF-A-KIND PRODUCTION USING PSLX INFORMATION MODEL.
DOI: 10.5220/0003640901670172
In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2011), pages 167-172
ISBN: 978-989-8425-81-2
Copyright
c
2011 SCITEPRESS (Science and Technology Publications, Lda.)
After clarifying the target management systems in
Section 2, Section 3 shows preliminary studies of
industrial cases, and a proposed model of the
quotation process is described in Section 4. Using
the model defined in Section 4, Section 5 illustrates
result of the industrial case studies with typical
numerical data. In order to manage the process of
quotation, the paper proposes usage of PSLX
information model. The section 6 briefly introduces
the standard model, and then explains how to apply
the PSLX onto the quotation. Finally in Section 7,
the concluding remarks are described for future
discussions.
2 TARGET MANAGEMENT
PROCESSES
Manufacturing operations management can be
modelled with the viewpoint of customer order
fulfilment strategies. With respect to occasion of
start production, make-to-order (MTO) and make-to-
stock (MTS) strategies are defined. Considering that
whole manufacturing processes begin with design
and engineering, procurement, production, and
shipping and delivery, make-to-order (MTO)
strategies are divided into finish-to-order (FTO),
build-to-order (BTO) and engineering to order
(ETO). One-of-a-kind production can be categorized
in ETO strategies.
The scope of this paper is mainly on
management processes on ETO strategy. But it is not
limited to, because when a particular one-of-a-kind
production order will be repeated several times, then
the situation changes to BTO. It is assumed that the
target management process has a quotation process
before receiving a firm order from the customer.
During such quotation process, a customer and the
manufacturer have to exchange engineering
specification necessary for estimation of cost and
delivery date.
Information exchanged in this process contains
engineering drafts, 2D or 3D CAD data, bills of
materials/resources (BOM/BOR), instruction sheet
of fabrication, quality assurance test specification
and so on. Initial offers are provided by customers,
but sometimes, the first offer may be revised by the
manufacturer to optimize the specifications and
increase effectiveness. The manufacture, at this time,
uses domain specific knowledge and huge technical
experiences.
Some manufacturers receiving a quotation
request cannot make a final estimation without
initiating another quotation process to their second
tire suppliers. Usually those second tire suppliers are
also SMEs, and take an important role of partial
manufacturing processes or providing key supply
parts. They have to deal with information chain in
quotation process among the SMEs network.
3 PRELIMINARY CASE STUDIES
Preliminary research was done with industrial case
studies of two SMEs in Japan. Yuki Precision Co.
Ltd., Kanagawa prefecture, is a precise
manufacturing company of approximately 20
employees. Yuki provides precise parts in small lot-
size for aero and space industries as well as medical
and welfare equipment industries. In terms of
quotation, the company receives a quotation request
with engineering data and quality insurance
information. Most of those requests need to have a
face-to-face meeting with engineers in the first
place.
After clarifying the specification, Yuki start
quotation process by deciding material treatments,
selection of fabrication process and equipment,
design of tools and operations. Then, Yuki tries to
plan whole manufacturing processes including
outsourcing. Cost and lead time estimation is done
after those resource allocation and optimization. In
order to reduce the effort for this quotation process,
Yuki tries to acquire the knowledge of quotation by
storing the fact of those decisions. Most of
manufacturing steps are standardized and defied in
database schema.
The second company, Konno Corporation Ltd.
of approximately 30 employees in Tokyo, is
providing products and equipment parts made of
stainless steel panels. Main fields of Konno’s
customers are laboratories and research and
development division of makers or institute,
especially chemical, foods, and life sciences. In this
case, quotation processes start with rough sketch
written by hand. Konno’s customers send e-mail of
quotation request with pdf-file attachments.
The information that Konno receives from
customers has functional requirements of the final
product. Since the information received doesn’t have
detailed specifications for manufacturing, additional
engineering information must be produced by
Konno, such as material component, size and
mechanism of parts, estimated strength, surface
preparation, and so on. All of these engineering
processes are included in the quotation process and
need to be done in average of 5 to 10 days.
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4 COMMON QUOTATION
PROCESS OF OKP
The outcomes of the preliminary research can be
summarized as a common quotation process of one-
of-a-kind production. Regarding PSLX technical
specification (Nishioka, 2008) and definition of
Advanced planning and scheduling (APS) (IEC
2007), we define three major steps of the quotation
process.
Step 1: Master Production Engineering
After the first inquiry from customer, retrieving the
past knowledge and investigating the relevant
engineering information are made in as a first step.
Then, master production information including bills
of materials (BOM) and bills of resources/routings
(BOR) are generated. In contrast to the typical
production management in which BOM and BOR
are master data that is not revised often, this step
needs to define such engineering information with
respect to the structure of the product and the
process of appropriate production.
Step 2: Advanced Planning and Scheduling
The second step is to decide resource allocation and
materials requirement for the desired production. In
this step, net requirement of materials need to be
calculated in the planning time horizon. At the same
time, the resource capacity constraints need to be
considered. The planner does not decide a single
plan, but couple of alternatives so as to achieve the
final result can be more optimal. In other words, the
allocation is allowed to have alternatives, such as in
house production versus outsourcing.
Step 3: Cost and Lead Time Estimation
Finally but sometimes repeatedly, total cost and lead
time are calculated depending on two aspects. First,
the production process and resource allocations from
a process view. Then, from a object view or material
view, the purchasing materials and equipment tools
are took into account. When the plan need to have
outsourcing or special purchasing that need a second
tire quotation, the final result can be made after the
planner receives the answer from their partners. If
the calculation result is not satisfactory, then move
to the first or second step and repeat the process.
The model of quotation process above can be
described with respect to our two research
perspectives: one is the variety of decision
parameters spreading to design and manufacturing.
Product definition information and manufacturing
process information are necessary to be managed in
simultaneous way. The second feature is that
decentralized and networking decision making need
to be concerned. Both those two features cause
difficult problems in terms of technical knowledge
management. Any ICT method cannot be simply
applied to the problem without standardization
efforts and human-involved approaches.
5 APPLICATION OF
INDUSTRIAL CASE
This section shows a practical industrial case of
quotation process and verifies that the standard
model can be suitable. The application case
described here is also used for discussions that
PSLX standard models introduced the next section is
applicable.
The data in Table 1 is arranged a little bit
because of confidentiality but the variation is within
the level that does not affect any essential change of
quotation process. The following numerical data
listed in Table 1 is calculated and used for making
the final quotation. As a result, this case estimates
that cost estimation is 172,600 JPY. The table shows
several components of the final cost amount for the
particular order received by Konno’s case study.
Using the final data of this quotation listed in
Table 1, the decision making procedure of the
quotation process is traced for verification of the
model. First, in Step 1, master production
engineering tries to get BOM and BOR for the
customer requirement. Figure 1 illustrates the chart
diagram that is obtained by combining of BOM and
BOR.
In Figure 1, sharp rectangle denotes an object
which represents products, materials and resources.
On the other hand, round rectangle denotes a process
which represents manufacturing activities as well as
purchasing and design activities. All those rectangles
in the figure will be certain cost pools when the
objects and the processes are defined with
connection to materials and resources that consume
certain cost in the actual world.
The chart diagram that represents engineering
ideas of whole manufacturing process cannot be
defined completely, because the result may have
alternative routings that affect the structure of the
diagram. For example, a process may be assigned to
factory outside of the company, and then the works
need to be transported by an additional process.
Thus, the chart diagram must have several
variations in the beginning.
Additionally, depending on the status of
inventory, several rectangles in the chart of Figure 1
might be eliminated because of the stock of the parts
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Table 1: Quotation data and cost components.
Item name Cost item Resource Unit cost Quantity Data Unit Cost
Production
Fab 3 Site 1 100 90 Min 9,000
Fab 4 Site 2 100 130 Min 13,000
Assy 1 Site 3 80 40 Min 3,200
Inspect 1 Site 4 100 60 Min 6,000
Outsourcing
Fab 1 Partner 1 1,600 20 QTY 32,000
Fab 2 Partner 2 800 40 QTY 32,000
Surface 1 Partner 3 1,100 20 QTY 22,000
Material Cost
Material 1 Supplier 1 3,300 2 Kg 6,600
Material 2 Supplier 2 6,400 3 M 19,200
Parts Cost
Parts 1 Supplier 3 580 20 QTY 11,600
Parts 2 Supplier 4 20 60 QTY 1,200
Design Design 1 Planner 1 5,000 3 Hour 15,000
Transport Delivery 1 Carrier 1 1,800 1 Set 1,800
Figure 1: Chart diagram of production.
and materials. This consideration is made in the
second step of advanced planning and scheduling in
the quotation process.
The term advanced planning and scheduling
(APS) in this study, means that material
requirements and resource capacity allocations are
simultaneously planned in a short term planning
period (couple of weeks). In this case, the time
bucket of the planning is day.
APS needs to know standard lead time for each
combination of manufacturing resource and desired
process. In some cases, the data is stored in database.
In others, the planner needs to approximate the value.
If the resource is off-site and controlled by other
enterprises, the planner needs to make another
quotation to the partners.
In Figure 2, the chart diagram provided by step 1
is translated from the viewpoint of resource
scheduling. All the processes that compose the
whole manufacturing process remain in Figure 2.
When those processes are assigned to particular
resources, each component can have the lead time
estimation by calculating with standard lead time
and quantity of the order. Double line processes in
Figure 2 denotes that the lead time is obtained by
inter-enterprise communication.
Figure 2: Critical path for production lead time.
The third step, that is, cost and lead time
estimation can be executed after above preparation
steps. With respect to the total lead time of the
production, planner can calculate the critical path of
the process network illustrated in Figure 2. Where
the count of the date excludes holiday, the planned
delivery date of the final products should be
arranged regarding the work calendar.
Finally, the cost amount is calculated using all
the information obtained so far. As the Table 1
shows, cost components can be listed by deploying
the rectangles illustrated in Figure 1. This means that
all the processes and leaf objects are cost consuming
entities.
Each cost item of row is calculated simply by
means of multiplying a standard cost and quantity.
This calculation can be arranged depending on the
knowledge of production engineering. It may be
better to choose an experience of past cases than the
calculation using such logical expressions. Therefore,
the calculation logic of each row, as well as result of
the cost data should be reusable.
As the final step of quotation process, total cost
and lead time are calculated and compared to the
customer request. In some cases, all the alternatives
of the calculation result are not satisfactory to the
request. In such cases, planner tries to choose a
constraint or boundary that affects the cost and lead
time, and relax it or remove it before going back to
the first step of the quotation process.
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6 PSLX ONTOLOGY AND
INFORMATION MODEL
It is very important to have a standard model and
modelling guidelines for representing quotation
information of each industrial case. PSLX ontology
and information model (Nishioka, 2008, 2010, 2011)
actually have been very helpful for the two case
studies of this paper. Moreover, this is a key to
success when such information should be exchanged
between enterprises because the data content sent by
requester cannot correctly understand by the receiver.
Figure 3: PSLX object model.
Of course, all the objects and processes don’t
need to be exchanged in detail. However, in cases of
quotation process and engineering negotiation,
master data such as BOM and BOR need to be
shared. This section verifies that PSLX ontology and
information model have capability to support for
such representations.
In order to establish information exchange
among manufacturing operations management,
B2MML specification provides a XML schema
depending ISA-95/IEC62264 object model
(B2MML, 2011). On the other hand, OASIS
Production Planning and Scheduling Technical
committee publishes another messaging model based
on PSLX ontology (OASIS, 2011).
Figure 3 is an essential portion of PSLX object
models, some of which objects correspond to PSLX
ontology components. According to the model, the
term used in the previous sections can be simplified.
In Figure 1, Fab x, Procure x, Transport x, Assy x,
Surface x, Inspect x, and Delivery x are Process,
while Material x and Part x are Production Item.
For the advanced planning and scheduling step,
Resource in Figure 3 has two different roles: one is a
role of production resources which have capability
to produce, and the other is that the production
produces or consumes. The former includes Site x,
Partner x and Supplier x. The latter includes Parts x
and Material x.
All the source of cost accounted come from the
Resource in Figure 3. And the aspect of process cost
can be considered by capacity usage, while the
aspect of object (shaped rectangle in Figure 1) is
Inventory in Figure 3. On the other hand, with
respect to lead time, only the Process in Figure 1
should be focused.
PSLX information model has activity model on
the other side (Nishioka, 2006). The PSLX technical
specification prescribes that activity composes a
management function brock (MFB). Typical
examples of MFB defined so far include S&OP,
Master planning, Advanced planning and scheduling,
Detailed scheduling, and so on.
It has not been defined in the latest version that
which existing MFB corresponds to the quotation
process. At least, it can be said that many essential
functions of the existing MFBs are useful for
quotation management. For example, procedures
such as MRP logic and PERT/CPM algorism can be
applied. As those procedures can be defined as
activities, it is easy to create a new SMB for
quotation. Otherwise, it is also possible to remain
free formation of quotation process while standard
can only guide to use or select the predefined
activities.
7 CONCLUDING REMARKS
In the case studies of this paper, both two companies
don’t use the package software or IT systems
designed for quotation. The practitioners mention
that typical spread sheet tools provide them the best
support. This is because the process of quotation is
neither well defined nor well structured, but ill-
defined.
The question arises here that, what is the best
solution for them by using ICT. It is clear that spread
sheets are not enough for such business activities
that need to share the information. Concrete and
precise quotation system performs well, but less
flexibility for unsuspected situation and change of
business strategies. The insight obtained by the case
studies is seeking the answer where the semi-
standard model, which can be evolved according to
the system circumstances, should be maintained by
human beings, and continually add/replace
information to a simple database.
PSLX information model consists of object
model, activity model, where PSLX ontology and
data pool are performed to connect with the actual
QUOTATION PROCESS MANAGEMENT OF ONE-OF-A-KIND PRODUCTION USING PSLX INFORMATION
MODEL
171
world. The experimental result shows that quotation
process is emerging target of ICT application, and
that standardized activities such as PSLX can be
applied as a tool for human-involved information
and communication technologies. We believe that
loose coupling between computers and human
beings can be provided by standardization of
semantics and software components that supports
communications with evolutional vocabularies. The
future studies of information exchange methods
between different enterprises are also challenging.
ACKNOWLEDGEMENTS
This work was partially supported by KAKENHI
(20500142) of Grant-in-Aid for Scientific Research
(C), Japan Society for the Promotion of Science.
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