6 process selection

8/10/2019 6 Process Selection

1/37

Types of Processes


2/37

The Four VThe Four Vss VolumeVolume of demandof demand

How many the organisation makesHow many the organisation makes

Service vs. Mass ProductionService vs. Mass Production VarietyVariety in operationsin operations

The ability to adapt the transformation process to meet needsThe ability to adapt the transformation process to meet needsof the customerof the customer

Taxi vs. TrainTaxi vs. Train

VariationVariation in demandin demand

Adapting to changing demandAdapting to changing demand

VisibilityVisibility of transformationof transformation How much of the operations functions are visible to theHow much of the operations functions are visible to the

customercustomer

Some operations have mixed high/low visibilitySome operations have mixed high/low visibilityegegRestaurant Front and KitchenRestaurant Front and Kitchen


3/37

Variationin Demand

High Low

High LowVisibility

VarietyHigh Low

VolumeLow High

A Typology of OperationsA Typology of Operations


4/37


5/37

ProductProduct--Flow CharacteristicsFlow Characteristics

(Also known asmass or discreteproduction)

Continuous

Production

Repetitive

Production

Product Focused

IntermittentProductionBatch Shop

Process Focused Project Form

Manufacturing Processes

IntermittentProductionJob Shop


6/37

The Most Important ConflictThe Most Important ConflictVolumeVolumevsvsVarietyVarietyProject Job Batch Mass Continuous

Product UniqueUnique

aspect to

each

product

Made to

order

Made

to stockCommodity

Volume Only OneVery low

to low

Low to

medHigh Very high

Variety InfiniteVery high

to highMediumto high

Low Very low


7/37

Process TypesProcess Types -- ProductsProducts

ProjectJob

Batch

Mass

Continuous

Volume

Variety

Low

Hig

h

Low High


8/37

Product-Focused

Processes (conversions) are arranged based onProcesses (conversions) are arranged based on

the sequence of operations required to producethe sequence of operations required to producea product or provide a servicea product or provide a service

Continuous ProductionContinuous Production Also calledAlso called Production LineProduction Line oror AssemblyAssembly

LineLine

Two general formsTwo general forms Discrete unitDiscrete unitautomobiles, dishwashersautomobiles, dishwashers

Process (Continuous)Process (Continuous)petrochemicals, paperpetrochemicals, paper


9/37

PurchasedPurchased

Components,Components,

SubassembliesSubassemblies

Product-Focused

222

3311

44

1

77

66

55

ComponentsComponents SubassemSubassem..

AssembliesAssemblies

Product/Material FlowProduct/Material Flow

Production OperationProduction Operation

Assem

blies

Assem

blies

Raw MaterialRaw Material ComponentsComponents

Compon

Compon..

Subassem

Subassem

..

Raw MaterialRaw Material

Fin. GoodsFin. Goods


10/37

Product-Focused

AdvantagesAdvantages

Lower laborLower labor--skill requirementsskill requirements

Reduced worker trainingReduced worker training

Reduced supervisionReduced supervision

Ease of planning and controlling productionEase of planning and controlling production

DisadvantagesDisadvantages

Higher initial investment levelHigher initial investment level Relatively low product flexibilityRelatively low product flexibility


11/37

Process-Focused Processes (conversions) are arranged based onProcesses (conversions) are arranged based on

the type of process, i.e., similar processes arethe type of process, i.e., similar processes aregrouped togethergrouped together

Products/services (jobs) move from departmentProducts/services (jobs) move from department

(process group) to department based on that(process group) to department based on thatparticular jobparticular jobs processing requirementss processing requirements

Intermittent ProductionIntermittent Production

Also calledAlso called Job ShopJob Shop oror Batch ShopBatch Shop

ExamplesExamples

Auto body repairAuto body repair Custom woodworkin shoCustom woodworkin sho


12/37

Process-Focused

CuttingCutting AssemblyAssembly SandingSanding FinishingFinishingPlaningPlaning

DrillingDrilling

ShapingShaping

TurningTurning

111 555 777

333

222

111 666

333

666

444

222Job AJob AJob A

Job BJob B

444 555

Custom Woodworking ShopCustom Woodworking Shop


13/37

Process-Focused

AdvantagesAdvantages

High product flexibilityHigh product flexibility

Lower initial investment levelLower initial investment level

DisadvantagesDisadvantages Higher laborHigher labor--skill requirementsskill requirements

More worker trainingMore worker training

More supervisionMore supervision More complex production planning and controllingMore complex production planning and controlling


14/37


15/37

Group Technology/CellularManufacturing

Cellular ManufacturingCellular Manufacturing

Some part families (those requiring significant batchSome part families (those requiring significant batchsizes) can be assigned to manufacturing cells.sizes) can be assigned to manufacturing cells.

The organization of the shop floor into cells isThe organization of the shop floor into cells is

referred to asreferred to as cellular manufacturingcellular manufacturing..

Flow of parts within cells tend to be more likeFlow of parts within cells tend to be more like

productproduct--focused systemsfocused systems


16/37


Advantages (relative to a job shop)Advantages (relative to a job shop)

Process changeovers simplifiedProcess changeovers simplified

Variability of tasks reduced (less training needed)Variability of tasks reduced (less training needed)

More direct routes through the systemMore direct routes through the system

Quality control is improvedQuality control is improved

Production planning and control simplerProduction planning and control simpler

Automation simplerAutomation simpler


17/37


DisadvantagesDisadvantages

Duplication of equipmentDuplication of equipment

UnderUnder--utilization of facilitiesutilization of facilities

Processing of items that do not fit into a family mayProcessing of items that do not fit into a family may

be inefficientbe inefficient


18/37


Candidates for GT/CM are job shops having:Candidates for GT/CM are job shops having:

A degree of parts standardizationA degree of parts standardization

Moderate batch sizesModerate batch sizes


19/37

Capital RequirementsCapital Requirements

The amount of capital required tends to differ forThe amount of capital required tends to differ for

each type of production processeach type of production process

Generally, the capital required is greatest for productGenerally, the capital required is greatest for product--

focused, dedicated systemsfocused, dedicated systems

Generally, the capital required is lowest for processGenerally, the capital required is lowest for process--

focused, job shopsfocused, job shops

The amount of capital available and the cost of capitalThe amount of capital available and the cost of capital

are important considerationsare important considerations


20/37

Economic Analysis Cost Functions of Processing AlternativesCost Functions of Processing Alternatives

Fixed CostsFixed Costs

Annual cost when production volume is zeroAnnual cost when production volume is zero

Initial cost of buildings, equipment, and other fixed assetsInitial cost of buildings, equipment, and other fixed assets

Variable CostsVariable Costs Costs that vary with production volumesCosts that vary with production volumes

Labor, material, and variable overheadLabor, material, and variable overhead


21/37

Cost Functions of Processing

AlternativesAnnual Cost of Production ($000)Annual Cost of Production ($000)

UnitsUnitsProducedProduced

Per YearPer Year

100,000100,000 250,000250,000

CellularCellular

ManufacturingManufacturing

PreferredPreferred

AutomatedAutomated

Assembly LineAssembly Line

PreferredPreferred

JobJob

ShopShopPreferredPreferred

500500

1,0001,000

2,0002,000

1,5001,500

JobSh

op

JobS

hop

CellularMa

nuf.

CellularMa

nuf.

AutomAutom.Assembly

Line.Assemb

lyLine


22/37

Product-Process Matrix


23/37

Classification byType of Customer Order

Make to Stock (MTS)Make to Stock (MTS)

Assemble to Order (ATO)Assemble to Order (ATO)

Make to Order (MTO)Make to Order (MTO)

Engineer to Order (ETO)Engineer to Order (ETO)


24/37

Production processes

are used to make anymanufactured item.

Step 1 Source the

parts needed Step 2 Make the

product

Step 3 Deliver theproduct

Production Processes


25/37

Production Processes


26/37

26

Product Delivery Strategies

Product Volume

Produc

tVariety

HighLow

High

Engineer-to-Order

Make-to-Order

Assemble-to-Order

Make-to-Stock

Mass

Customization


27/37

Make to Stock (MTS) Produce finished goods; customer buys fromProduce finished goods; customer buys from

inventoryinventory

Advantages: smooth productionAdvantages: smooth production

Disadvantages: inventoryDisadvantages: inventory


28/37

Make to Order (MTO)

Start production when customer orders.Start production when customer orders.

Advantages: no inventoryAdvantages: no inventory

Disadvantages: intermittent productionDisadvantages: intermittent production


29/37

Assemble to Order (ATO) Make parts and subassemblies; finish whenMake parts and subassemblies; finish when

customer orders.customer orders.

Advantages: less inventory; faster serviceAdvantages: less inventory; faster service

Disadvantages: some inventoryDisadvantages: some inventory


30/37

Engineer to Order (ETO) Start to design when customer orders.Start to design when customer orders.

Advantages: no inventory; flexibilityAdvantages: no inventory; flexibility

Disadvantages: long lead timeDisadvantages: long lead time


31/37


32/37


33/37

Characteristics of Workers, Operations,and Innovations Relative to the Degree

of Customer/Server Contact


34/37


35/37


36/37

Process Design in Services CustomerCustomer--asas--ParticipantParticipant

Physical goods may be a significant part of thePhysical goods may be a significant part of theserviceservice

Services may be either standardized or customServices may be either standardized or custom

High degree of customer involvement in the processHigh degree of customer involvement in the process

Examples: ATM, selfExamples: ATM, self--service gas stationservice gas station


37/37

Process Design in Services CustomerCustomer--asas--ProductProduct

Service is provided through personal attention to theService is provided through personal attention to thecustomercustomer

Customized serviceCustomized service onon the customerthe customer

High degree of customer contactHigh degree of customer contactThere is a perception of high qualityThere is a perception of high quality

Customer becomes the central focus of the processCustomer becomes the central focus of the process

designdesign Examples: medical clinic, hair salonExamples: medical clinic, hair salon

6 process selection

Documents