Process Design 7 PowerPoint presentation to accompany Heizer and Render Operations Management, Global Edition, Eleventh Edition Principles of Operations Management, Global Edition, Ninth Edition PowerPoint slides by Jeff Heyl 2014 2014 Pearson Pearson Education Education 7-1 OUTLINE Four Process Strategies Using Crossover Charts for Process Selection Tools for Process Analysis and Design Key Issues in Service Process Design Technologies to Improve Production and Productivity 2014 Pearson Education 7-2
Process Strategy The objective is to create a process to produce products that meets customer requirements within cost and other managerial constraints 2014 Pearson Education 7-3 Process, Volume, and Variety Volume Figure 7.1 Low Volume High Variety one or few units per run, (allows customization) 2014 Pearson Education High Volume Process Focus projects, job shops (machine, print, hospitals, restaurants) Arnold Palmer Hospital
Changes in Modules modest runs, standardized modules Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only Repetitive Process Mass Customization (difficult to achieve, but huge rewards) Dell Computer Repetitive (autos, motorcycles, home appliances) Harley-Davidson Poor Strategy (Both fixed and variable costs are high) Product Focus (commercial baked goods, steel, glass, beer)
Frito-Lay 7-4 Process Strategies Four basic strategies 1. 2. 3. 4. Process focus Repetitive focus Product focus Mass customization Within these basic strategies there are many ways they may be implemented 2014 Pearson Education 7-5 Manufacturing Process Layout Lathe Department L L L L
L L L L L L Milling Department M M D D D D M M D
D D D G G G P G G G P Grinding Department Receiving and Shipping 2014 Pearson Education Drilling Department Painting Department
A A A Assembly 7-6 Process Focus (low-volume, high-variety, intermittent processes) Arnold Palmer Hospital Figure 7.2(a) 2014 Pearson Education Many inputs (surgeries, sick patients, baby deliveries, emergencies) Many departments and many routings Many different outputs (uniquely treated patients) 7-7 Process Focus
Facilities are organized around specific activities or processes General purpose equipment and skilled personnel High degree of product flexibility Typically high costs and low equipment utilization Product flows may vary considerably making planning and scheduling a challenge 2014 Pearson Education 7-8 Repetitive Focus Facilities often organized as assembly lines Characterized by modules with parts and
assemblies made previously Modules may be combined for many output options Less flexibility than process-focused facilities but more efficient 2014 Pearson Education 7-9 Repetitive Focus Raw materials and module inputs (multiple engine models, wheel modules) Few modules (modular) Harley Davidson Figure 7.2(b) 2014 Pearson Education Modules combined for many Output options (many combinations of motorcycles) 7 - 10 Repetitive Focus
Raw materials or customer Station 1 Station Station 22 Station Station 33 Material Material Material Material and/or labor and/or labor and/or labor and/or
labor Station Station 44 Finished item Repetitive Manufacturing 2014 Pearson Education 7 - 11 Product Focus Few Inputs (corn, potatoes, water, seasoning) (high-volume, low-variety, continuous process) Frito-Lay Figure 7.2(c) 2014 Pearson Education Output variations in size, shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material) 7 - 12
Product Focus D Continuous caster C Scrap steel A Nucor Steel Plant B Ladle of molten steel Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft E Electric furnace F Hot mill for finishing, cooling, and coiling G H
I 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 13 Product Focus Facilities are organized by product High volume but low variety of products Long, continuous production runs enable efficient processes Typically high fixed cost but low variable cost Generally less skilled labor 2014 Pearson Education 7 - 14 Mass Customization
The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires Combines the flexibility of a process focus with the efficiency of a product focus 2014 Pearson Education 7 - 15 Mass Customization Many parts and component inputs (chips, hard drives, software, cases) Many modules (high-volume, high-variety) Dell Computer Figure 7.2(d) 2014 Pearson Education
Many output versions (custom PCs and notebooks) 7 - 16 Mass Customization TABLE 7.1 Mass Customization Provides More Choices Than Ever NUMBER OF CHOICES ITEM 1970s 21ST CENTURY Vehicle styles 18 1,212 Bicycle types 8 211,000 Software titles 0 400,000
Web sites 0 255,000,000 267 744 40,530 300,000 5 185 160 340 14,000 150,000 0 102 Movie releases per year New book titles
Houston TV channels Breakfast cereals Items (SKUs) in supermarkets LCD TVs 2014 Pearson Education 7 - 17 Comparison of Processes TABLE 7.2 Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 1. Small quantity
and large variety of products 1. Long runs, usually a standardized product from modules 1. Large quantity and small variety of products 1. Large quantity and large variety of products 2. Broadly skilled operators 2. Moderately trained employees 2. Less broadly skilled operators 2. Flexible
operators 2014 Pearson Education 7 - 18 Comparison of Processes TABLE 7.2 Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 3. Instructions for each job 3. Few changes
in the instructions 3. Standardized job instructions 3. Custom orders requiring many job instructions 4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory relative to the value of the product 2014 Pearson Education 7 - 19 Comparison of Processes TABLE 7.2 Comparison of the Characteristics of Four Types of Processes
PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 5. Finished goods are made to order and not stored 5. Finished goods are made to frequent forecasts 5. Finished goods are made to a
forecast and stored 5. Finished goods are build-toorder (BTO) 6. Scheduling is complex 6. Scheduling is routine 6. Scheduling is routine 6. Sophisticated scheduling accommodates custom orders 2014 Pearson Education 7 - 20 Comparison of Processes TABLE 7.2 Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY)
REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) 7. Fixed costs are low and variable costs high 7. Fixed costs are dependent on flexibility of the facility 7. Fixed costs are high and variable costs low 2014 Pearson Education MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 7. Fixed costs tend to be high
and variable costs low 7 - 21 Crossover Chart Example Evaluate three different accounting software products Calculate crossover points between software A and B and between software B and C TOTAL FIXED COST DOLLARS REQUIRED PER ACCOUNTING REPORT Software A $200,000 $60 Software B $300,000 $25 Software C $400,000 $10
2014 Pearson Education 7 - 22 Crossover Chart Example 200,000 + 60 V1 =300,000 + 25 V1 ( ) ( ) 35V1 =100,000 V1 =2,857 Software A is most economical from 0 to 2,857 reports 300,000 + 25 V2 =400,000 + 10 V2 ( ) ( ) 15V2 =100,000 V2 =6,666 Software B is most economical from 2,857 to 6,666 reports 2014 Pearson Education 7 - 23
Crossover Charts Variable costs Variable costs $ Variable costs $ $ Fixed costs Fixed costs Fixed costs Repetitive Process B pr oc es sA co sts Low volume, high variety
Process A To ta l $ To tal s es c o pr B High volume, low variety Process C sts co co ss C e c l pro Tota
sts 400,000 300,000 200,000 Fixed cost Process A Figure 7.3 (2,857) 2014 Pearson Education V1 V2 (6,666) Fixed cost Process B Fixed cost Process C Volume 7 - 24 Focused Processes Focus brings Less overhead costs Less complexity More efficiency
Focus can be on: Customers (Hotel owners: dishwashers) Products (Caterpillar) Service (Children hospital) Technology (SAP: software) 2014 Pearson Education 7 - 25 Analyzing and Designing Processes Design the process to achieve a competitive advantage Analyze the process to eliminate the steps that do not add value 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 26 Tools Used for Process Analysis and Design Flow Charts - Shows the movement of materials Time-Function Mapping - Shows flows and time frame Value-Stream Mapping - Shows flows and time
and value added beyond the immediate organization Process Charts - Uses symbols to show key activities Service Blueprinting - focuses on customer/provider interaction 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 27 Flow Chart Order waits for sales rep. Operator takes phone order. Orders wait to be picked up. Orders wait for supervisor. No Is order complete ?
Orders are moved to supervisors in-box. Supervisor inspects orders. Yes Order is fulfilled. 2014 Pearson Education 7 - 28 Baseline Time-Function Map Print Warehouse WIP Plant B Wait Extrude Wait
Move Transport Figure 7.4(a) Wait Product WIP Plant A Product Wait Order Production control Product Process order WIP Sales Receive product
WIP Order product Order Customer 12 days 2014 Pearson Education 13 days 1 day 4 days 1 day 10 days Move 1 day 0 day 1 day 52 days 7 - 29 Target Time-Function Map
Process order Wait Order Production control Product Sales Receive product Print Extrude Product Plant WIP Warehouse Transport 1 day 2 days 1 day
Wait Product Order product Order Customer Move 1 day 1 day 6 days Figure 7.4(b) 2014 Pearson Education 7 - 30 Value-Stream Mapping Figure 7.5 2014 Pearson Education 7 - 31 Process Chart 2014 Pearson Education
7.6 7 - Figure 32 Service Blueprinting Helps to identify potential failure points in customer and service provider interaction Defines three levels of interaction Level 1: Activities under the control of the customer Level 2: Interaction between the customer and service provider Level 3: Activities performed invisibly to the customer Each level has different management 2014 Pearsonissues Education 7 - 33 2011 Pearson Education, Inc. publishing as Prentice Hall Service Blueprint Poka-Yoke (level 1): Put a bell in driveway so that customer will be noticed Personal Greeting Level #1 Service Diagnosis Perform Service
Customer arrives for service. (3 min) Friendly Close Customer departs F Warm greeting and obtain service request. (10 sec) Level #2 No Standard request. (3 min) Direct customer to waiting room. F Level #3 2014 Pearson Education Determine specifics.
(5 min) Can service be done and does customer approve? (5 min) F F Yes Yes Notify customer and recommend an alternative provider. (7min) Customer pays bill. (4 min) F F Notify customer the car is ready. (3 min)
No F Perform required work. (varies) 2011 Pearson Education, Inc. publishing as Prentice Hall F Prepare invoice. (3 min) Figure 7.8 7 - 34 Special Considerations for Service Process Design Some interaction with customer is necessary, but this often affects performance adversely The better these interactions are accommodated in the process design, the more efficient and effective the process
Find the right combination of cost and customer interaction 2014 Pearson Education 7 - 35 Improving Service Productivity TABLE 7.3 Techniques for Improving Service Productivity STRATEGY Separation TECHNIQUE Structuring service so customers must go where the service is offered Self-service Postponement Self-service so customers examine, compare, and evaluate at their own pace Customizing at delivery Focus
Restricting the offerings 2014 Pearson Education EXAMPLE Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits Supermarkets and department stores Customizing vans at delivery rather than at production Limited-menu restaurant 7 - 36 Improving Service Productivity TABLE 7.3 Techniques for Improving Service Productivity STRATEGY Modules TECHNIQUE Modular selection of service Modular production
Automation Separating services that may lend themselves to some type of automation Precise personnel scheduling Scheduling Training 2014 Pearson Education Clarifying the service options Explaining how to avoid problems EXAMPLE Investment and insurance selection Prepackaged food modules in restaurants Automatic teller machines Scheduling ticket counter personnel at 15-minute intervals at airlines Investment counselor, funeral directors After-sale maintenance personnel 7 - 37
Technologies to Improve Production and Productivity 1. CNC Machinery 2. Automatic identification systems (AISs) Bar Codes and RFID 3. Vision system for process control and inspection, (video camera & computers) 4. Robots 5. Automated storage and retrieval systems (ASRSs) 6. Automated guided vehicles (AGVs) 7. Flexible manufacturing systems (FMSs) 8. Computer-integrated manufacturing (CIM) 2014 Pearson Education 7 - 38 CNC Machinery 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 39 Vision Systems for Process Control Real-time monitoring and control of processes
Sensors collect data Devices read data on periodic basis Measurements translated into digital signals then sent to a computer Computer programs analyze the data Resulting output may take numerous forms 2014 Pearson Education 7 - 40 Robots Perform monotonous or dangerous tasks Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy 2014 Pearson Education 7 - 41 Automated Storage and Retrieval Systems (ASRSs) Automated placement and withdrawal of parts and products Reduced errors and labor Particularly useful in inventory and test areas of manufacturing firms 2014 Pearson Education 7 - 42 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 43 Automated Guided Vehicle
(AGVs) Electronically guided and controlled carts Used for movement of products and/or individuals 2014 Pearson Education 7 - 44 2014 Pearson Education 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 45 Flexible Manufacturing System A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black. 2014 Pearson Education Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.
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