Contract manufacturing industry has enjoyed tremendous growth in the last few years; an industry prediction is 20 percent growth per year through the year of 2000. However, the competition and the requirements from OEM customers have become stiffer. To sustain and increase its market share, a contract manufacturer needs to continuously improve quality, reduce production cycle time and at the same time keep costs down. These requirements are challenging since a contract manufacturer usually has to build a large variety of different assemblies, sometimes with small to medium quantities.Cellular manufacturing (CM) emerging from group technology is a good answer to these challenges. In this paper, the issues related to design and implement CM, using the examples in our electronic assembly operations, will be discussed, and some of the effective methods for machine-product grouping presented. Discussions will also be given to some of the organizational structure to the cell implementation. The goal of this paper is to describe how cellular manufacturing can be applied in our contract manufacturing industry.
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