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Process Strategy and Capacity Planning. Introduction. What: Making process and capacity decisions Where: Produce goods and services Why: Long term effects on company. Process Focus. Complete jobs on demand Low volume High variety “Job shop” Products move between processes
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Introduction • What: Making process and capacity decisions • Where: Produce goods and services • Why: Long term effects on company
Process Focus • Complete jobs on demand • Low volume • High variety • “Job shop” • Products move between processes • High flexibility
Repetitive Focus • Modules • Assemble Modules into finished products • More structure • Less flexibility • Some customizing
Product Focus • Produce one product • High volume • Low variety • Continuous process
Mass Customization Focus • Individualized goods and services • What customer wants when they want it • Volume of product focus with flexibility of process focus
Process Analysis Tools • Designed to achieve competitive advantage? • Eliminate steps that do not add value? • Maximize customer value? • Win orders?
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
Time-Function Mapping 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
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 Charts
Low High Mass Service Professional Service Personal banking Commercial Banking General purpose law firms Full-service stockbroker Boutiques Retailing High Low Degree of Labor Intensity Service Factory Service Shop Law clinics Limited service stockbroker For-profit hospitals Fine dining restaurants Fast food restaurants Warehouse and catalog stores Hospitals Airlines No frills airlines Degree of Interaction and Customization Process Design for Services
Process Design for Services • Layout • Human Resources • Technology
Process Reengineering • Design of Process based on initial assumptions • Assumptions change! • Rethink and redesign • Flexibility
Capacity Planning • Design Capacity = maximum theoretical output of system • Effective Capacity = Capacity expected in current operation • Utilization = Actual Output / Design Capacity • Efficiency = Actual Output / Effective Capacity
Capacity Planning • Anticipated Production = Design Capacity x Effective Capacity x Efficiency
Expected Demand New Capacity Demand Time in Years Capacity leads demand with an incremental expansion Capacity Expansion
Expected Demand New Capacity Demand Time in Years Capacity leads demand with a one-step expansion Capacity Expansion
Expected Demand New Capacity Demand Time in Years Capacity lags demand with an incremental expansion Capacity Expansion
Expected Demand New Capacity Demand Time in Years Attempts to have an average capacity, with an incremental expansion Capacity Expansion
Approaches to Capacity Expansion • May need to manage demand through: • Staffing changes • Adjusting equipment and processes • Increasing throughput
Fixed Costs Variable Costs Contribution Revenue Function Crossover Chart Net Present Value Break-even Analysis
Design Technology • Internet • Intranet • CAD • DFMA • 3-D Object Modelling • STEP • CAM • Virtual Reality
Production Technology • Numerical Control • Process Control • Vision Systems • Robots • Automated Storage and Retrieval Systems • Automated Guided Vehicle • Flexible Manufacturing System • Computer Integrated Manufacturing
Information Technology • Transaction Processing System • Automatic Identification System • Management Information System • Artificial Intelligence • Expert System • Fuzzy Logic • Neural Network
Information Technology • Enterprise Resource Planning (ERP) • Automate and integrate processes • Share common data • SAP, JD Edwards, BAAN, PeopleSoft