heizer om10 ch07-process startegy
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10/16/2010
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77 Process Strategy and SustainabilityProcess Strategy and Sustainability
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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
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Process FocusRepetitive FocusProduct FocusMass Customization FocusComparison of Process Choices
Outline Outline –– ContinuedContinued
Process Analysis and DesignFlow ChartsTime-Function Mapping
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Time Function MappingValue-Stream MappingProcess ChartsService Blueprinting
Outline Outline –– ContinuedContinued
Special Consideration for Service Process Design
Customer Interaction and Process Design
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DesignMore Opportunities to Improve Service Processes
Selection of Equipment and Technology
Outline Outline –– ContinuedContinued
Production TechnologyMachine TechnologyAutomatic Identification Systems (AIS ) d RFID
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(AISs) and RFIDProcess ControlVision SystemsRobots
Outline Outline –– ContinuedContinued
Production Technology (cont.)Automated Storage and Retrieval Systems (ASRSs)A t t d G id d V hi l (AGV )
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Automated Guided Vehicles (AGVs)Flexible Manufacturing Systems (FMSs)Computer-Integrated Manufacturing (CIM)
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Outline Outline –– ContinuedContinued
Technology in ServicesProcess Redesign S t i bilit
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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)
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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
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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)
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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
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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
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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
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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)
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Many output versions(custom PCs and notebooks)
Many modules
Figure 7.2(d)
(high-volume, high-variety)Dell Computer
Mass CustomizationMass Customization
Mass Customization
Repetitive FocusFlexible peopleand equipment
Figure 7.3
Modular techniquesAccommodating
Product and Process Design
Responsive Supply Chains
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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
Mass CustomizationMass Customization
Imaginative and fast product designRapid process design
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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
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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
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)
3. Operators are broadly skilled
3. Employees are modestly trained
3. Operators are less broadly skilled
3. Flexible operators are trained for the necessary
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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
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)
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
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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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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)
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
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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
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)
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
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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
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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
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Focus can beCustomersProductsServiceTechnology
Changing ProcessesChanging Processes
Difficult and expensiveMay mean starting overP t t d t i
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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
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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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Process Analysis and Process Analysis and DesignDesign
Flow Charts - Shows the movement of materialsTime-Function Mapping - Shows flows and
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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
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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
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
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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
Process Analysis and Process Analysis and DesignDesign
Flow Charts - Shows the movement of materialsTime-Function Mapping - Shows flows and time frame
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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
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Figure 7.6
Process ChartProcess Chart
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Service BlueprintingService Blueprinting
Focuses on the customer and provider interactionDefines three levels of interaction
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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
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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
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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
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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
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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
Service Process MatrixService Process Matrix
Labor involvement is highSelection and training highly
Mass Service and Professional ServiceMass Service and Professional Service
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g g yimportantFocus on human resourcesPersonalized services
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Service Process MatrixService Process Matrix
Service Factory and Service ShopService Factory and Service ShopAutomation of standardized services
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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
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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
Strategy Technique Example
Postponement Customizing at delivery
Customizing vans at delivery rather than at production
Improving Service Improving Service ProductivityProductivity
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Focus Restricting the offerings
Limited-menu restaurant
Modules Modular selection of serviceModular production
Investment and insurance selectionPrepackaged food modules in restaurants
Table 7.3
Strategy Technique Example
Automation Separating services that may lend themselves to some type of automation
Automatic teller machines
Improving Service Improving Service ProductivityProductivity
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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
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education, product enhancementHuman Resources
Recruiting and trainingImpact of flexibility
Equipment and TechnologyEquipment and Technology
Often complex decisionsPossible competitive advantage
Flexibility
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FlexibilityStable processes
May allow enlarging the scope of the processes
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Production TechnologyProduction TechnologyMachine technologyAutomatic identification systems (AISs)Process controlVision system
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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
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Improved environmental impact Reduced changeover timeDecreased sizeReduced power requirements
Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)
Improved data acquisitionReduced data entry errors
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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
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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
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Never boredModest costSuperior to individuals performing the same tasks
RobotsRobots
Perform monotonous or dangerous tasksPerform tasks requiring significant
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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
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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
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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
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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
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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)
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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
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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,
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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
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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
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2. Recycling3. Regulations4. Reputation
SustainabilitySustainability
ResourcesOperations is primary userReducing use is win-win
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RecyclingBurn, bury, or reuse wasteRecycling begins at design
SustainabilitySustainability
RegulationsLaws affect transportation, waste, and noiseI i l
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Increasing regulatory pressureReputation
Leadership may be rewardedBad reputation can have negative consequences
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