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Operations Management Process Strategy and Capacity Planning Chapter 7

Operations Management Process Strategy and Capacity Planning Chapter 7. Learning Objectives. When you complete this chapter, you should be able to : Identify or Define : Process focus Repetitive focus Product focus Process reengineering Service process issues. Repetitive Process

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Operations Management Process Strategy and Capacity Planning Chapter 7

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  1. Operations ManagementProcess Strategy and Capacity PlanningChapter 7 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  2. Learning Objectives When you complete this chapter, you should be able to : • Identify or Define: • Process focus • Repetitive focus • Product focus • Process reengineering • Service process issues © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  3. Repetitive Process (Modular) Low-Volume (Intermittent) High-Volume (Continuous) Fit of Process, Volume, and Variety Process focus projects, job shops,(machine, print, carpentry) Standard Register Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Repetitive (autos, motorcycles) Harley Davidson Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Poor strategy (Variable costs are high) Product focus (commercial baked goods, steel, glass) Nucor Steel © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  4. Production Process Flow Diagram 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 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  5. Continuum Types of Process Strategies • Process strategies that follow a continuum • Within a given facility, several strategies may be used • These strategies are often classified as: Process-Focused Repetitive-Focused Product-Focused © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  6. Product A Operation 1 2 3 Product B Process-Focused Strategy • Facilities are organized by process • Similar processes are together • Example: All drill presses are together • Low volume, high variety products • ‘Jumbled’ flow • Other names • Intermittent process • Job shop © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  7. Figure 7A © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  8. Bank © 1995 Corel Corp. Hospital Machine Shop © 1995 Corel Corp. © 1995 Corel Corp. Process-Focused Strategy Examples © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  9. Process Focused Strategy - Pros & Cons • Advantages • Greater product flexibility • More general purpose equipment • Lower initial capital investment • Disadvantages • More highly trained personnel • More difficult production planning & control • Low equipment utilization (5% to 25%) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  10. Repetitive Focused Strategy • Facilities often organized by assembly lines • Characterized by modules • Parts & assemblies made previously • Modules combined for many output options • Other names • Assembly line • Production line © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  11. Figure 7B © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  12. Repetitive Focused Strategy -Considerations • More structured than process-focused, less structured than product focused • Enables quasi-customization • Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  13. Fast Food Clothes Dryer McDonald’sover 95 billion served Truck © 1995 Corel Corp. © 1984-1994 T/Maker Co. © 1995 Corel Corp. Repetitive-Focused Strategy - Examples © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  14. Figure 7.3 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  15. Products A & B 1 2 3 Operation Product-Focused Strategy • Facilities are organized by product • High volume, low variety products • Where found • Discrete unit manufacturing • Continuous process manufacturing • Other names • Line flow production • Continuous production © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  16. Figure 7C © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  17. Product-Focused Strategy Pros & Cons • Advantages • Lower variable cost per unit • Lower but more specialized labor skills • Easier production planning and control • Higher equipment utilization (70% to 90%) • Disadvantages • Lower product flexibility • More specialized equipment • Usually higher capital investment © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  18. Soft Drinks (Continuous, then Discrete) Light Bulbs (Discrete) © 1995 Corel Corp. © 1995 Corel Corp. Mass Flu Shots (Discrete) © 1984-1994 T/Maker Co. Paper (Continuous) © 1995 Corel Corp. Product-Focused Examples © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  19. Figure 7.4 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  20. Process Focus Repetitive Focus Product Focus 1. Product: Small 1. Product: Long runs, 1. Product: Large quantity, large usually standardized quantities, small variety variety 2. Equipment: 2. Equipment: Special; 2. Equipment: General purpose assembly line Special-purpose 3. Operators broadly 3. Employees modestly 3. Operators less skilled trained broadly skilled 4. Many job 4. Repetitive operations 4. Few work orders and instructions job instructions; standardization Table 7.1 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  21. Process Continuum Product Focused (continuous process) Process Focused (intermittent process) Repetitive Focus (assembly line) Continuum Low variety, high volume High utilization (70% - 90%) Specialized equipment High variety, low volume Low utilization (5% - 25%) General-purpose equipment Modular Flexible equipment © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  22. Mass Customization • Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires. • Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant. © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  23. Mass Customization - More Choices Than Ever © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  24. Questions for Process Analysis and Design • Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? • Does the process eliminate steps that do not add value? • Does the process maximize customer value as perceived by the customer? • Will the process win orders? © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  25. Tools for Process Design • Flow Diagrams • Process Charts • Time-Function/Process Mapping • Service Blueprinting © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  26. Time Function Map Receive product Order Product Customer Process Order Sales Order Productioncontrol 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 © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  27. SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description Ñ Write order D lðo Ñ On desk ¡ðo w Ñ 75 To buyer D ¡ o è Ñ Examine D ¡ðn ¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage Process Chart Example © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

  28. Process Reengineering • The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance • Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions • Requires reexamination of the basic process and its objectives • Focuses on activities that cross boundaries © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

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