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

 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

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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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