pom j7 process design
TRANSCRIPT
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Chapter 7
Process Design
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Process Strategies
The objective of a process strategy is tobuild a production process that meets
customer requirements and productspecifications within cost and othermanagerial constraints
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Process Strategies
How to produce a product or provide aservice that
Meets or exceeds customer requirements
Meets cost and managerial goals
Has long term effects on
Efficiency and production flexibility Costs and quality
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Process Strategies
Four basic strategies
1. Process focus
2. Repetitive focus3. Product focus
4. Mass customization
Within these basic strategies there are manyways they may be implemented
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Process, Volume, and Variety
Process Focusprojects, job shops
(machine, print, hospitals,restaurants)
Arnold Palmer Hospital
Repetitive(autos, motorcycles,
home appliances)Harley-Davidson
Product Focus(commercial bakedgoods, steel, glass,
beer)Frito-Lay
High Varietyone or few unitsper run,(allows
customization)
Changes inModulesmodest runs,standardizedmodules
Changes inAttributes (suchas grade, quality,size, thickness,etc.)long runs only
Mass Customization(difficult to achieve, but
huge rewards)Dell Computer
Poor Strategy (Bothfixed and variable
costs are high)
LowVolume
RepetitiveProcess
HighVolume
VolumeFigure 7.1
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Process Focus
Facilities are organized around specificactivities or processes
General purpose equipment and skilled
personnel High degree of product flexibility
Typically high costs and low equipmentutilization
Product flows may vary considerably makingplanning and scheduling a challenge
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Process Focus Many inputs(surgeries, sick patients,
baby deliveries, emergencies)
Many different outputs(uniquely treated patients)
Many departments andmany routings
Figure 7.2(a)
(low volume, high variety,intermittent processes)
Hospital, Machine Shop
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Repetitive Focus
Facilities often organized as assembly lines
Characterized by modules with parts andassemblies made previously
Modules may be combined for manyoutput options
Less flexibility than process-focusedfacilities but more efficient
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Repetitive
Focus
Raw materials andmodule inputs
Modules combined for manyOutput options
(many combinations of motorcycles)
Fewmodules
(multiple engine models,wheel modules)
Figure 7.2(b)
(modular)
Harley Davidson
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Product Focus
Facilities are organized by product
High volume but low variety of products
Long, continuous production runs enableefficient processes
Typically high fixed cost but low variablecost
Generally less skilled labor
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Product Focus Few Inputs(corn, potatoes, water,
seasoning)
Output variations in size, shape,and packaging
(3-oz, 5-oz, 24-oz package labeledfor each material)
Figure 7.2(c)
(low-volume, high variety,continuous process)
Frito-Lay
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Product Focus
Nucor Steel Plant
Continuouscaster
Continuous cast steel shearedinto 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
D
E F
GH
I
Scrap
steel
Ladle of molten steelElectricfurnace
A
BC
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Mass Customization
The rapid, low-cost production of goodsand service to satisfy increasinglyunique customer desires
Combines theflexibility of aprocess focuswith the efficiencyof a product focus
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Mass Customization
Table 7.1
Vehicle models140 286
Vehicle types 18 1,212
Bicycle types 8 211,000
Software titles 0 400,000
Web sites 0 162,000,000
Movie releases per year 267 765
New book titles40,530 300,000
Houston TV channels 5 185
Breakfast cereals 160 340Items (SKUs) in 14,000 150,000
supermarketsLCD TVs 0 102
Number of ChoicesItem 1970s 21stCentury
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Mass
Customization
Many parts andcomponent inputs
Many output versions(custom PCs and notebooks)
Many modules
(chips, hard drives, software,cases)
Figure 7.2(d)
(high-volume, high-variety)
Dell Computer
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Mass Customization
Mass Customization
Effectivescheduling
techniques
Rapidthroughputtechniques
Repetitive FocusFlexible peopleand equipment
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
Figure 7.3
Modulartechniques
AccommodatingProduct and Process
Design
Responsive Supply
Chains
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Mass Customization
Imaginative and fast product design
Rapid process design
Tightly controlled inventorymanagement
Tight schedules
Responsive supply chain partners
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The comparison of processes can be furtherenhanced by looking at the point where the total
cost of the processes changes.
Crossover Chart.A chart of costs at the possible volumes for more
than one process.
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Example 1:
Kleber Enterprises would like to evaluate 3 accountingsoftware (A, B and C) to support changes in its internal
accounting processes. The resulting processes will have
cost structure similar to these shown is the figure. The
costs of the software for these processes are
Total Fixed
Costs
$ required per
actg report
A $200,000 $60
B $300,000 $25
C $400,000 $10
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Crossover Charts
Fixed costs
Variablecosts
$
High volume, low variety
Process C
Fixed costs
Variablecosts$
Repetitive
Process B
Fixed costs
Variablecosts$
Low volume, high variety
Process A
Fixed costProcess A
Fixed costProcess B
Fixed costProcess C
V1(2,857) V2 (6,666)
400,000
300,000
200,000
Volume
$
Figure 7.4
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Focused Processes
Focus brings efficiency
Focus on depth of product line
rather than breadth
Focus can be
Customers
Products
Service
Technology
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Changing Processes
Difficult and expensive
May mean starting over
Process strategy determinestransformation strategy for anextended period
Important to get it right
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Process Analysis and Design
Is the process designed to achieve acompetitive advantage?
Does the process eliminate steps that do notadd value?
Does the process maximize customer value?
Will the process win orders?
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Process Analysis and Design
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time
frame
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Tools that help us understand the complexities
of process design and redesign:
1. Flow Chart
2. Time-Function mapping
3. Value-Stream Mapping
4. Process Charts
5. Service Blueprinting
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Flow Chart
A drawing used to analyze movement of people or
material.
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Time-function Mapping (or process mapping)
A flow chart with time added on the horizontal axis.
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Value-stream Mapping (VSM)
A process that helps managers understand how to
add value in the flow of material and informationthrough the entire production process.
Example 2
Motorola has received an order for 11,000 cell phones
per month and wants to understand how the order willbe processed through manufacturing.
Value-Stream Mapping - Showsflows and time and value addedbeyond the immediate organization
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Value-Stream Mapping
Figure 7.6
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Process Charts
Charts that use symbols to analyze the movement
of people or material.
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Service Blueprinting
A process analysis technique that lends itself to a
focus on the customer and the providers
interaction with the customers.
Focuses on the customer and provider
interaction Defines three levels of interaction
Each level has different management
issues
Identifies potential failure points
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Process Analysis Tools
Flowcharts provide a view of the bigpicture
Time-function mapping adds rigor and
a time element Value-stream analysis extends to
customers and suppliers
Process charts show detail Service blueprint focuses on customer
interaction
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Service Factory Service Shop
Degree of Customization
Low High
DegreeofLabor
Low
High
Mass Service Professional Service
Service Process Matrix
Commercialbanking
Privatebanking
General-purpose law firms
Law clinics
Specializedhospitals
Hospitals
Full-servicestockbroker
Limited-servicestockbroker
Retailing
Boutiques
Warehouse andcatalog stores Fast-foodrestaurantsFine-diningrestaurants
Airlines
No-frillsairlines
Figure 7.9
Digitalorthodontics
Traditionalorthodontics
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Service Process Matrix
Labor involvement is high
Selection and training highly important
Focus on human resources
Personalized services
Mass Service and Professional Service
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Service Process Matrix
Service Factory and Service Shop
Automation of standardized services
Low labor intensity responds well toprocess technology and scheduling
Tight control required to maintainstandards
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Techniques for improving service productivity
Layout and Human Resources
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Production Technology
1. Machine TechnologyComputer numerical control (CNC)machinery
with its own computer and memory.
2. Automatic Identification Systems (AISs)
A system for transforming data into electronic
form, e.g., bar codes
Radio frequency identification (RFID)A wireless system in which integrated circuits
with antennas send radio waves.
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3. Process Control
Use of information technology to control process.
4. Vision SystemsUse of video camera and computer technology in
inspection.
5. Robots
6. Automated Storage and Retrieval Systems (ASRSs)
Computer-controlled warehouses that provide for
the automatic placement of parts into and from
designated places within a warehouse.
7. Automated Guided Vehicles (AGVs)
Electronically guided and controlled cart used to
move materials.
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8. Flexible Manufacturing Systems (FMSs)
A system that uses an automated work cellcontrolled by electronic signals from a
common centralized computer facility.
9. Computer Integrated Manufacturing (CIM)
A manufacturing system in which CAD, FMS,inventory control, warehousing and shipping
are integrated.
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Examples of Technology Impact on Service
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Process Redesign
The fundamental rethinking of businessprocesses to bring about dramaticimprovements in performance
Relies on reevaluating the purpose of the
process and questioning both the purpose andthe underlying assumptions
Requires reexamination of the basic processand its objectives
Focuses on activities that cross functional lines
Any process is a candidate for redesign
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Sustainability
Resources
Operations is primary user
Reducing use is win-win Recycling
Burn, bury, or reuse waste
Recycling begins at design
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Sustainability
Regulations
Laws affect transportation, waste,and noise
Increasing regulatory pressure
Reputation
Leadership may be rewarded
Bad reputation can have negativeconsequences
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Bagot Copy Shop has a volume of 125,000 black-
and-white copies per month. Two salesmen havemade presentations to Gordon Bagot for machines
of equal quality and reliability. The Print Shop 5 has
a cost of $2,000 per month and a variable cost of
$0.03. The other machine (a Super Copy 100) willcost only $1,500 per month but the toner is more
expensive, driving the cost up to $0.035. If cost and
volume are the only considerations, which machine
should Bagot purchase?
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Reference:
Operations Management by Jay Heizer and
Barry Render, 10thedition, 2011
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Suppose a manufacturer has identified the following
options for obtaining a machined part:
1. It can buy the part at $200 per unit (including
materials).2. It can make the part on a semi-automated lathe at $75
per unit (including materials).
3. It can make the part on a specialized machine at $15
per unit (including materials).
There is negligible fixed cost if the item is purchased;
$80,000 fixed costs for the semi-automatic lathe; and a
$200,000 fixed costs for the specialized machine.
a. Determine which option is best if the manufacturer
needs 1000 units of the part.
b. Determine the range for which each option is best.
(cross-over points).
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A manager is trying to decide whether to purchase a certain
part or to have it produced internally. Internal production could
use either of the two processes. One would entail a variable cost
of $17 per unit and an annual fixed cost of $200,000; the otherwould entail a variable cost of $14 per unit and an annual fixed
cost of $240,000. Three vendors are willing to provide the parts.
Vendor A has a price of $20 per unit for any volume up to
30,000 units. Vendor B has a price of $22 per unit for demand of1,000 units or less, and $18 per unit for larger quantity. Vendor
C offers a price of $21 per unit for the 1st1,000 units and $19
per unit for additional units.
a. The manager anticipates an annual volume of 10,000 units,which alternative is the best from a cost standpoint?
b. Determine the range for which each alternative is best. Are
there any alternatives that are never best? Why?