heizer om10 ch07-process startegy

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77 Process Strategy and SustainabilityProcess Strategy and Sustainability

7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

OutlineOutlineGlobal Company Profile: Harley-DavidsonFour Process Strategies

Process Focus


Process FocusRepetitive FocusProduct FocusMass Customization FocusComparison of Process Choices

Outline Outline –– ContinuedContinued

Process Analysis and DesignFlow ChartsTime-Function Mapping


Time Function MappingValue-Stream MappingProcess ChartsService Blueprinting


Special Consideration for Service Process Design

Customer Interaction and Process Design


DesignMore Opportunities to Improve Service Processes

Selection of Equipment and Technology


Production TechnologyMachine TechnologyAutomatic Identification Systems (AIS ) d RFID


(AISs) and RFIDProcess ControlVision SystemsRobots


Production Technology (cont.)Automated Storage and Retrieval Systems (ASRSs)A t t d G id d V hi l (AGV )


Automated Guided Vehicles (AGVs)Flexible Manufacturing Systems (FMSs)Computer-Integrated Manufacturing (CIM)

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Technology in ServicesProcess Redesign S t i bilit


Sustainability

Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

1. Describe four production processes


2. Compute crossover points for different processes

3. Use the tools of process analysis

Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

4. Describe customer interaction in process design


process design5. Identify recent advances in

production technology6. Discuss the 4 Rs of sustainability

HarleyHarley--DavidsonDavidsonRepetitive manufacturing worksRepetitive manufacturing works

The leading U.S. motorcycle companyEmphasizes quality and lean


manufacturingMaterials as Needed systemMany variations possibleTightly scheduled repetitive production line

Process Flow DiagramProcess Flow Diagram

THE ASSEMBLY LINETESTING28 tests

Oil tank work cellAir cleaners

Incoming parts

From Milwaukee on a JIT arrival schedule

Engines and transmissions

Frame tube bending

Frame-building work cells

Frame machining

Hot-paintframe painting


Shocks and forks

Handlebars

Fender work cell

Fluids and mufflers

Fuel tank work cell

Wheel work cellRoller testing

Crating

Process StrategiesProcess Strategies

The objective of a process strategy is The objective of a process strategy is to build a production process that to build a production process that meets customer requirements and meets customer requirements and product specifications within costproduct specifications within cost


product specifications within cost product specifications within cost and other managerial constraintsand other managerial constraints

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Process, Volume, and VarietyProcess, Volume, and Variety

Process Focusprojects, job shops

(machine, print, hospitals, restaurants)

Arnold Palmer

High Varietyone or few units per run,(allows customization)

Mass Customization(difficult to achieve, but huge rewards)

Dell Computer

Low Volume

Repetitive Process

High Volume

VolumeFigure 7.1


Hospital

Repetitive(autos, motorcycles,

home appliances)Harley-Davidson

Product Focus(commercial baked goods,

steel, glass, beer)Frito-Lay

Changes in Modulesmodest runs, standardized modulesChanges in Attributes (such as grade, quality, size, thickness, etc.) long runs only

Poor Strategy (Both fixed and variable costs

are high)

Process StrategiesProcess Strategies

How to produce a product or provide a service that

Meets or exceeds customer requirements


requirementsMeets cost and managerial goals

Has long term effects onEfficiency and production flexibilityCosts and quality

Process StrategiesProcess StrategiesFour basic strategies

1. Process focus2. Repetitive focus


3. Product focus4. Mass customization

Within these basic strategies there are Within these basic strategies there are many ways they may be implementedmany ways they may be implemented

Process FocusProcess FocusFacilities are organized around specific activities or processesGeneral purpose equipment and skilled personnel


High degree of product flexibilityTypically high costs and low equipment utilizationProduct flows may vary considerably making planning and scheduling a challenge

Process FocusProcess Focus Many inputs(surgeries, sick patients,

baby deliveries, emergencies)


Many different outputs(uniquely treated patients)

Many departments and many routings

Figure 7.2(a)

(low volume, high variety, intermittent processes)Arnold Palmer Hospital

Repetitive FocusRepetitive FocusFacilities often organized as assembly linesCharacterized by modules with parts and assemblies made previously


and assemblies made previouslyModules may be combined for many output optionsLess flexibility than process-focused facilities but more efficient

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Repetitive Repetitive FocusFocus

Raw materials and module inputs

Few modules

(multiple engine models, wheel modules)


Modules combined for manyOutput options

(many combinations of motorcycles)

Figure 7.2(b)

(modular)Harley Davidson

Product FocusProduct FocusFacilities are organized by productHigh volume but low variety of productsL ti d ti


Long, continuous production runs enable efficient processesTypically high fixed cost but low variable costGenerally less skilled labor

Product FocusProduct Focus Few Inputs(corn, potatoes, water,

seasoning)


Output variations in size, shape, and packaging

(3-oz, 5-oz, 24-oz package labeled for each material)

Figure 7.2(c)

(low-volume, high variety, continuous process)

Frito-Lay

Product FocusProduct FocusNucor Steel Plant

tinuo

us c

aste

r

Continuous cast steel

D Scrap steel

Ladle of molten steelElectric furnace

A

BC


Con

t Continuous cast steel sheared into 24-ton slabs

Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

E F

GHI

Mass CustomizationMass CustomizationThe 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

Mass CustomizationMass Customization

Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software titles 0 400,000

Number of ChoicesItem 1970s 21st Century

7 - 24© 2011 Pearson Education, Inc. publishing as Prentice HallTable 7.1

Software titles 0 400,000Web sites 0 162,000,000Movie releases per year 267 765New book titles 40,530 300,000Houston TV channels 5 185Breakfast cereals 160 340Items (SKUs) in 14,000 150,000

supermarketsLCD TVs 0 102

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Mass Mass CustomizationCustomization

Many parts and component inputs(chips, hard drives,

software, cases)


Many output versions(custom PCs and notebooks)

Many modules

Figure 7.2(d)

(high-volume, high-variety)Dell Computer


Mass Customization

Repetitive FocusFlexible peopleand equipment

Figure 7.3

Modular techniquesAccommodating

Product and Process Design

Responsive Supply Chains


Mass Customization

Effective scheduling techniques

Rapid throughput techniques

Process-FocusedHigh variety, low volume

Low utilization (5% to 25%)General-purpose equipment

Product-FocusedLow variety, high volume

High utilization (70% to 90%)Specialized equipment


Imaginative and fast product designRapid process design


Tightly controlled inventory managementTight schedulesResponsive supply chain partners

Comparison of ProcessesComparison of ProcessesProcess 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 with

1. Large quantity and small variety of products

1. Large quantity and large variety of products are


of products are produced

product with options, produced from modules

of products are produced

products are produced

2. Equipment used is general purpose

2. Special equipment aids in use of an assembly line

2. Equipment used is special purpose

2. Rapid changeover on flexible equipment

Table 7.2


Repetitive Focus

(modular)



3. Operators are broadly skilled

3. Employees are modestly trained

3. Operators are less broadly skilled

3. Flexible operators are trained for the necessary


skilled necessary customization

4. There are many job instructions because each job changes

4. Repetitive operations reduce training and changes in job instructions

4. Work orders and job instructions are few because they are standardized

4. Custom orders require many job instructions

Table 7.2


Repetitive Focus

(modular)



5. Raw-material inventories high relative to the value

5. JIT procurement techniques are used

5. Raw material inventories are low relative to the

5. Raw material inventories are low


to the value of the product

are used relative to the value of the product

are low relative to the value of the product

6. Work-in-process is high compared to output

6. JIT inventory techniques are used

6. Work-in-process inventory is low compared to output

6. Work-in-process inventory driven down by JIT, kanban, lean production

Table 7.2

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Repetitive Focus

(modular)



7. Units move slowly through the facility

7. Assembly is measured in hours and days

7. Swift movement of units through the facility is

7. Goods move swiftly through the facility


facility days the facility is typical

facility

8. Finished goods are usually made to order and not stored

8. Finished goods made to frequent forecast

8. Finished goods are usually made to forecast and stored

8. Finished goods are often build-to-order (BTO)

Table 7.2


Repetitive Focus

(modular)



9. Scheduling is complex, concerned with trade-

9. Scheduling is based on building various

9. Scheduling is relatively simple, concerned

9. Sophisticated scheduling is required to accommodate


with tradeoffs between inventory, capacity, and customer service

various models from a variety of modules to forecasts

concerned with establishing output rate sufficient to meet forecasts

accommodate custom orders

10. Fixed costs tend to be low and variable costs high

10. Fixed costs dependent on flexibility of the facility

10. Fixed costs tend to be high and variable costs low

10. Fixed costs tend to be high, variable costs must be low

Table 7.2

Crossover ChartsCrossover Charts

Fixed costs

Variable costs

$

High volume, low varietyProcess C

Fixed costs

Variable costs$

RepetitiveProcess B

Fixed costs

Variable costs$

Low volume, high varietyProcess A


Fixed cost Process A

Fixed cost Process B

Fixed cost Process C

V1(2,857) V2 (6,666)

400,000 300,000 200,000

Volume

$

Figure 7.4

Focused ProcessesFocused ProcessesFocus brings efficiencyFocus on depth of product line rather than breadthF b


Focus can beCustomersProductsServiceTechnology

Changing ProcessesChanging Processes

Difficult and expensiveMay mean starting overP t t d t i


Process strategy determines transformation strategy for an extended periodImportant to get it right

Process Analysis and Process Analysis and DesignDesign

Is the process designed to achieve a competitive advantage?Does the process eliminate steps that


Does the process eliminate steps that do not add value?Does the process maximize customer value?Will the process win orders?

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Flow Charts - Shows the movement of materialsTime-Function Mapping - Shows flows and


Time Function Mapping Shows flows and time frame

“Baseline” Time“Baseline” Time--Function MapFunction MapCustomer

Sales

Production control

Pl t A

Receive product

uct

P i tder

Order product

Process order

Wait

Ord

er


Plant A

Warehouse

Plant B

Transport

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day52 days

Figure 7.5

Move

Prod

uct

Prod

Extrude

Wait

WIP

Prod

uct

Move

Wait

WIP WIP

Print

Wait

Ord

WIP

“Target” Time“Target” Time--Function MapFunction MapCustomer

Sales

Production control

Receive product

Prod

uct

r

Order product

Process order

Wait

Ord

er


Plant

Warehouse

Transport

1 day 2 days 1 day 1 day 1 day6 days

Figure 7.5

Move

Prod

uct

Extrude

Wait

PrintOrd

er WIP

Prod

uct


Flow Charts - Shows the movement of materialsTime-Function Mapping - Shows flows and time frame


Value-Stream Mapping - Shows flows and time and value added beyond the immediate organizationProcess Charts - Uses symbols to show key activitiesService Blueprinting - focuses on customer/provider interaction

ValueValue--Stream MappingStream Mapping


Figure 7.6

Process ChartProcess Chart

7 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 7.7

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Service BlueprintingService Blueprinting

Focuses on the customer and provider interactionDefines three levels of interaction


Defines three levels of interactionEach level has different management issuesIdentifies potential failure points

Service BlueprintService BlueprintPersonal Greeting Service Diagnosis Perform Service Friendly Close

Level#1

Notifycustomer

and recommendan alternative

Customer arrives for service.

(3 min)

Warm greeting and obtain

service request.

F

Customer departs

Customer pays bill.(4 min)

F

Determine specifics.

(5 min)No


Level#3

Level#2

Figure 7.8

No

provider.(7min)

service request.(10 sec)

Direct customer to waiting room.

F

Notify customer the car is ready.

(3 min)

F

Perform required work.

(varies)Prepare invoice.

(3 min)F

FYesF

YesF

Standard request.(3 min)

Canservice be

done and does customer approve?

(5 min)

Process Analysis ToolsProcess Analysis ToolsFlowcharts provide a view of the big pictureTime-function mapping adds rigor and a time element


Value-stream analysis extends to customers and suppliersProcess charts show detailService blueprint focuses on customer interaction

Special Considerations for Special Considerations for Service Process DesignService Process DesignSome 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 processFind the right combination of cost and customer interaction

Degree of CustomizationLow High

bor

High

Mass Service Professional Service

Service Process MatrixService Process Matrix

Commercial banking

Private banking

General-purpose law firmsFull-service

stockbrokerBoutiques Digital

Traditional orthodontics


Service Factory Service Shop

Deg

ree

of L

ab

Low

Law clinicsSpecialized hospitals

Hospitals

Limited-service stockbroker

RetailingBoutiques

Warehouse and catalog stores

Fast-food restaurants

Fine-dining restaurants

Airlines

No-frills airlines

Figure 7.9

orthodontics


Labor involvement is highSelection and training highly

Mass Service and Professional ServiceMass Service and Professional Service


g g yimportantFocus on human resourcesPersonalized services

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Service Factory and Service ShopService Factory and Service ShopAutomation of standardized services


Low labor intensity responds well to process technology and schedulingTight control required to maintain standards

Improving Service Improving Service ProductivityProductivity

Strategy Technique Example

Separation Structure service so customers must go where the service is

ff d

Bank customers go to a manager to open a new account, to loan

ffi f l d


offered officers for loans, and to tellers for deposits

Self-service Self-service so customers examine, compare, and evaluate at their own pace

Supermarkets and department storesInternet ordering

Table 7.3


Postponement Customizing at delivery

Customizing vans at delivery rather than at production



Focus Restricting the offerings

Limited-menu restaurant

Modules Modular selection of serviceModular production

Investment and insurance selectionPrepackaged food modules in restaurants

Table 7.3


Automation Separating services that may lend themselves to some type of automation

Automatic teller machines



type o auto at o

Scheduling Precise personnel scheduling

Scheduling ticket counter personnel at 15-minute intervals at airlines

Training Clarifying the service optionsExplaining how to avoid problems

Investment counselor, funeral directorsAfter-sale maintenance personnel

Table 7.3

Improving Service Improving Service ProcessesProcesses

LayoutProduct exposure, customer


education, product enhancementHuman Resources

Recruiting and trainingImpact of flexibility

Equipment and TechnologyEquipment and Technology

Often complex decisionsPossible competitive advantage

Flexibility


FlexibilityStable processes

May allow enlarging the scope of the processes

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Production TechnologyProduction TechnologyMachine technologyAutomatic identification systems (AISs)Process controlVision system


Vision systemRobotAutomated storage and retrieval systems (ASRSs)Automated guided vehicles (AGVs)Flexible manufacturing systems (FMSs)Computer-integrated manufacturing (CIM)

Machine TechnologyMachine TechnologyIncreased precisionIncreased productivityIncreased flexibility


Improved environmental impact Reduced changeover timeDecreased sizeReduced power requirements

Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)

Improved data acquisitionReduced data entry errors


Increased speedIncreased scope of process automation

Example Example –– Bar codes and RFIDBar codes and RFID

Process ControlProcess ControlReal-time monitoring and control of processes

Sensors collect dataDevices read data on periodic basis


on periodic basisMeasurements translated into digital signals then sent to a computerComputer programs analyze the dataResulting output may take numerous forms

Vision SystemsVision SystemsParticular aid to inspectionConsistently accurateNever bored


Never boredModest costSuperior to individuals performing the same tasks

RobotsRobots

Perform monotonous or dangerous tasksPerform tasks requiring significant


requiring significant strength or enduranceGenerally enhanced consistency and accuracy

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Automated Storage and Automated Storage and Retrieval Systems (ASRSs)Retrieval Systems (ASRSs)

Automated placement and withdrawal of parts and products


Reduced errors and laborParticularly useful in inventory and test areas of manufacturing firms

Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)

Electronically guided and controlled carts


Used for movement of products and/or individuals

Flexible Manufacturing Flexible Manufacturing Systems (FMSs)Systems (FMSs)

Computer controls both the workstation and the material handling equipmentEnhance flexibility and reduced waste


Can economically produce low volume at high qualityReduced changeover time and increased utilizationStringent communication requirement between components

ComputerComputer--Integrated Integrated Manufacturing (CIM)Manufacturing (CIM)

Extension of flexible manufacturing systems

Backwards to engineering and inventory control


controlForward into warehousing and shippingCan also include financial and customer service areas

Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production

ComputerComputer--Integrated Integrated

Manufacturing Manufacturing (CIM)(CIM)


Figure 7.10

Technology in ServicesTechnology in ServicesService Industry Example

Financial Services

Debit cards, electronic funds transfer, ATMs, Internet stock trading, on-line banking via cell phone

Education Electronic bulletin boards, on-line journals, WebCT Blackboard and smart phones


WebCT, Blackboard and smart phones

Utilities and government

Automated one-man garbage trucks, optical mail and bomb scanners, flood warning systems, meters allowing homeowners to control energy usage and costs

Restaurants and foods

Wireless orders from waiters to kitchen, robot butchering, transponders on cars that track sales at drive-throughs

Communications Interactive TV, ebooks via Kindle 2

Table 7.4

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Technology in ServicesTechnology in ServicesService Industry Example

Hotels Electronic check-in/check-out, electronic key/lock system, mobile web booking

Wholesale/retail trade

ATM-like kiosks, point-of-sale (POS) terminals, e-commerce, electronic communication between store and supplier,


ppbar coded data, RFID

Transportation Automatic toll booths, satellite-directed navigation systems, WiFi in automobile

Health care Online patient-monitoring, online medical information systems, robotic surgery

Airlines Ticketless travel, scheduling, Internet purchases, boarding passes two-dimensional bar codes on smart phones

Table 7.4

Process RedesignProcess RedesignThe fundamental rethinking of business processes to bring about dramatic improvements in performanceRelies on reevaluating the purpose of the process and questioning both the


process and questioning both the purpose and the underlying assumptionsRequires reexamination of the basic process and its objectivesFocuses on activities that cross functional linesAny process is a candidate for redesign

SustainabilitySustainability

Sustainability in production processes1. Resources


2. Recycling3. Regulations4. Reputation


ResourcesOperations is primary userReducing use is win-win


RecyclingBurn, bury, or reuse wasteRecycling begins at design


RegulationsLaws affect transportation, waste, and noiseI i l


Increasing regulatory pressureReputation

Leadership may be rewardedBad reputation can have negative consequences


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