Operations Management Process Strategy Chapter 7

1. Operations ManagementProcess StrategyChapter 7

2. Outline • Four Process Strategies • Process Focus • Repetitive Focus • Product Focus • Mass Customization Focus

3. Outline – Continued • Process Analysis And Design • Flow Diagrams • Time-Function Mapping • Value Stream Mapping • Process Charts • Service Blueprinting

4. Outline – Continued • Service Process Design • Customer Interaction and Process Design • More Opportunities to Improve Service Processes • Process Selection

5. Outline – Continued • Production Technology • Machine Technology • Process Control • Vision Systems • Automated Storage and Retrieval System • Automated Guided Vehicle (AGV) • Flexible Manufacturing System (FMS) • Computer-Integrated Manufacturing (CIM)

6. Outline – Continued • Technology In Services • Process Redesign • Ethics And Environmentally Friendly Processes

7. Process Strategies • How to produce a product or provide a service that • Meets or exceeds customer requirements • Meets cost and managerial goals • Has long term effects on • Efficiency and production flexibility • Costs and quality

8. Process Strategies Four basic strategies • Process focus • Repetitive focus • Product focus • Mass customization

9. 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

10. High variety of outputs Many inputs Process Focus Print Shop

11. 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

12. Modules combined for many output options Raw materials and module inputs Few modules Repetitive Focus Automobile Assembly Line

13. Frame tube bending Frame-building work cells Frame machining Hot-paint frame painting THE ASSEMBLY LINE Engines and transmissions TESTING 28 tests Incoming parts From Milwaukee on a JIT arrival schedule Air cleaners Oil tank work cell Fluids and mufflers Shocks and forks Fuel tank work cell Handlebars Wheel work cell Fender work cell Roller testing Crating Process Flow Diagram

14. 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

15. Output variation in size, shape, and packaging Many inputs Product Focus Bottling Plant

16. D Scrap steel A B C Electric furnace Continuous caster Ladle of molten steel Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft E F Hot mill for finishing, cooling, and coiling G H I Product Focus Nucor Steel Plant

17. Comparison of Process Choices

18. A Comparison (2)

19. A Comparison (3)

20. A Comparison (4)

21. A Comparison (5)

22. 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

23. Repetitive Focus Modular design Flexible equipment Modular techniques Mass Customization Effective scheduling techniques Rapid throughput techniques Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Process Strategies

24. Process Selection

25. A and B 200,000 + 60 X = 300,000 + 25 X X = 2,857 • B and C 300,000 + 25 X = 400,000 + 10 X X = 6,666

26. Variable costs Variable costs Variable costs $ $ $ Fixed costs Fixed costs Fixed costs Repetitive Process B High volume, low variety Process C Low volume, high variety Process A $ Total cost Total cost Total cost 400,000 300,000 200,000 Fixed cost Process C Fixed cost Process B Fixed cost Process A V1 V2 (6,666) (2,857) Volume Crossover Charts Figure 7.6

27. Process Analysis and Design • Flow Diagrams - Shows the movement of materials • Time-Function Mapping - Shows flows and time frame • Process Charts - Uses symbols to show key activities • Service Blueprinting - focuses on customer/provider interaction

28. Customer Purchasing (order inks, paper, other supplies) Customer sales representative take order Vendors Prepress Department (Prepare printing plates and negatives) Receiving Accounting Printing Department Warehousing (ink, paper, etc.) Gluing, binding, stapling, labeling Collating Department Information flow Material flow Polywrap Department Shipping Flow Diagram

29. Receive product Order Product Customer Process Order Sales Productioncontrol Order Wait Order Print Plant A Product WIP Wait Wait Wait Warehouse Product WIP Plant B Extrude Product WIP WIP Transport Move Move 12 days 13 days 1 day 4 days 1 day 10 days 9 days 1 day 1 day 52 days Time Function Map

30. Process Chart

31. Service Blueprint • Focuses on the customer and provider interaction • Defines three levels of interaction • Each level has different management issues • Identifies potential failure points

32. Personal Greeting Service Diagnosis Perform Service Friendly Close Level #1 Customer arrives for service Customer departs Customer pays bill Notifycustomerand recommendan alternativeprovider Determine specifics Warm greeting and obtain service request No Standard request Canservice bedone and does customer approve? Level #2 No Direct customer to waiting room Notify customer the car is ready Perform required work Yes Yes Prepare invoice Potential failure point Service Blueprint Level #3

33. Service Process Design

34. Degree of Customization High Low Mass Service Professional Service Private banking Commercial banking High General- purpose law firms Full-service stockbroker Boutiques Retailing Degree of Labor Service Factory Service Shop Law clinics Specialized hospitals Limited-service stockbroker Warehouse and catalog stores Fine-dining restaurants Fast food restaurants Low Hospitals Airlines No frills airlines Service Process Matrix

35. Mass Service and Professional Service • Labor involvement is high • Selection and training highly important • Focus on human resources • Personalized services Service Factory and Service Shop • Automation of standardized services • Low labor intensity responds well to process technology and scheduling • Tight control required to maintain standards Service Process Matrix

36. Improving Service Productivity

37. Improving Service Productivity

38. Improving Service Productivity

39. Production Technology • Machine technology • Automatic identification systems (AIS) • Process control • Vision system • Robot • Automated storage and retrieval systems (ASRS) • Flexible manufacturing systems (FMS) • Computer-integrated manufacturing (CIM)

40. Machine Technology • Increased precision • Increased productivity • Increased flexibility • Improved environmental impact • Reduced changeover time • Decreased size • Reduced power requirements

41. Automatic Identification Systems (AIS) • Improved data acquisition • Reduced data entry errors • Increased speed • Increased scope of process automation

42. Process Control • Increased process stability • Increased process precision • Real-time provision of information for process evaluation • Data available in many forms

43. Vision Systems • Particular aid to inspection • Consistently accurate • Never bored • Modest cost • Superior to individuals performing the same tasks

44. Robots • Perform monotonous or dangerous tasks • Perform tasks requiring significant strength or endurance • Generally enhanced consistency and accuracy

45. Robotic Surgery

46. Automated Storage and Retrieval Systems (ASRS) • Automated placement and withdrawal of parts and products • Reduced errors and labor • Particularly useful in inventory and test areas of manufacturing firms

47. Automated Guided Vehicle (AGV) • Electronically guided and controlled carts • Used for movement of products and/or individuals

48. Flexible Manufacturing Systems (FMS) • Computer controls both the workstation and the material handling equipment • Enhance flexibility and reduced waste • Can economically produce low volume at high quality • Reduced changeover time and increased utilization • Stringent communication requirement between components

49. Computer Integrated Manufacturing (CIM) • Extension of flexible manufacturing systems • Backwards to engineering and inventory control • Forward into warehousing and shipping • Can also include financial and customer service areas • Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production

50. Top management decides to make a product Computer-aided design (CAD) designs the product OM runs the production process CIM Management Information System FMS Computer-aided manufacturing (CAM) Automated storage and retrieval system (ASRS) and automated guided vehicles (AGVs) Robots put the product together Computer Integrated Manufacturing (CIM)