process & capacity 2
TRANSCRIPT
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OutlineFour Process Strategies Process Focus Repetitive Focus Product Focus Mass Customization Focus
Capacity Forecasting Capacity Requirements Selection of Equipment and Technology Managing Demand Uncertainty
Break-Even Analysis Single-Product Case Multi-product Case
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Dell Computer Company“How can we make the process of buying
a computer better?”
Sells custom-build PCs directly to consumerIntegrated the Web into every aspect of its businessOperates with six days inventoryBuilds computers rapidly, at low cost, and only when orderedResearch focus on software designed to make installation and configuration of its PCs fast and simple
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Process Fit: Volume vs. Variety
Process focus: job shops,(machine, print, carpentry)
Repetitive(autos, motorcycles)
Harley Davidson
Product focus(paper, steel, glass)
High VarietyOne or few units per run (customization)
Medium Variety(Change product withstandardized modules)
Low Variety(Similar products with minor changes)
Mass Customization
(difficult to achieve, but huge rewards)
Dell Computer Co.
Poor strategy
(High variable cost)
Low-Volume(Intermittent)
Medium-Volume(Modular)
High-Volume(Continuous)
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Types of Process Strategies
ContinuumContinuum
Classify the process strategies by the level continuum:
Repetitive-Focused
Product-FocusedProcess-Focused
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Process-Focused Strategy•Facilities are organized by process•Similar processes are together
•Example: All drills or lathes are together•Low volume, high variety products•‘Jumbled’ flow
OperationProduct A
Product B
1111 2222 3333•Other names
•Intermittent process•Job shop
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Process-Focused Strategy Examples
Bank
© 1995 Corel Corp.
Machine Shop© 1995 Corel Corp.
Hospital© 1995 Corel Corp.
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Process-Focused Production
Variances of Process Focused Production
•University education
•Swimming pool remodeling
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Process Focused Strategy - Pros & Cons (p262)
Advantages Greater product flexibility Use more general purpose equipment Suitable for customization
Disadvantages More highly trained personnel More difficult production planning & control
(including inventory, machine and personnel scheduling, maintenance, quality control…)
Low equipment utilization (25% to 45%)
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Process Automation and Flexible Manufacturing System
Production Technology Automated Guided Vehicles (AGV) Automated Storage and Retrieval
Systems (ASRSs)
Flexible Manufacturing Systems (FMS) Programmable process Control Vision Systems and Robots
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Product-Focused Strategy•Facilities are organized to produce a small number of products•High volume, low variety products•Other names
•Continuous process manufacturing •Line flow production•Continuous production
Operation
Products A & B
11 22 33
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Product-Focused Examples
© 1995 Corel Corp.
Light Bulbs (Discrete)Paper (Continuous)
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
Soft Drinks (Continuous, then Discrete)
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Product Focused Process
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Product-Focused Strategy Pros & Cons (p242)
Advantages Lower variable cost per unit Use more specialized equipments Easier production planning and control Higher equipment utilization (70% to 90%)
Disadvantages Lower product flexibility High shut-down cost Usually higher capital investment
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Repetitive Focused Strategy
Facilities often organized by assembly linesCharacterized by modules Parts & assemblies made previously
Modules combined for many output options
Other names Assembly line Production line
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Repetitive-Focused Strategy - Examples
Truck
© 1995 Corel Corp.
Clothes Dryer
© 1995 Corel Corp.
Fast Food
McDonald’sover 95 billion served
McDonald’sover 95 billion served
© 1984-1994 T/Maker Co.
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Repetitive Focused Strategy -Considerations
More structured than process-focused, less structured than product focusedEnables quasi-customizationUsing modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model
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Harley-Davidson
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Process Fit: Volume vs. Variety
Process focus: job shops,(machine, print, carpentry)
Repetitive(autos, motorcycles)
Harley Davidson
Product focus(paper, steel, glass)
High VarietyOne or few units per run (customization)
Medium Variety(Change product withstandardized modules)
Low Variety(Similar products with minor changes)
Mass Customization
(difficult to achieve, but huge rewards)
Dell Computer Co.
Poor strategy
(High variable cost)
Low-Volume(Intermittent)
Medium-Volume(Modular)
High-Volume(Continuous)
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Mass CustomizationUsing technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires.Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.
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Repetitive Focus Assembly line
Modular Design Flexible equipment
Mass Customization
Process focus Intermittent process
High variety, low volume
Product focus
Continuous ProcessLow variety, high volume
Modular techniques
Scheduling techniques
Rapid throughput
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Automated Storage and Retrieval System (ASRS)
Provide for automatic placement and withdrawal of parts and products into and from designated places in a warehouse.Improve efficiency of material handling and inventory management in both production, distribution, and retail site
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Material handling machinesUsed to move parts & equipment in manufacturingMay be used to deliver mail & meals in service facilities
© 1984-1994 T/Maker Co.
Automatic Guided Vehicles (AGV)
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Using automated machines (DNC) & materials handling equipment togetherOften connected to centralized computerAlso called automated work cell
Computer
Machine 1
Machine 2
Robotor AGV
Auto ToolChg.
Auto ToolChg.
Production TechnologyFMS
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Computer Integrated Manufacturing (CIM)
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Process ReengineeringThe fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performanceRelies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptionsTools for process redesign across boundaries Flow Diagrams Process Charts Time-Function/Process Mapping Service Blueprint
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Process Strategies (Ikea and McDonalds Examples)
Involve determining how to produce a product or provide a serviceObjective Is the process designed to achieve
competitive advantage? Does the process eliminate steps that
do not add value? Does the process maximize customer
value as perceived by the customer? Will the process win orders?
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Time Function MapCustomer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
Order Product
Process Order
Extrude
Receive product
Wait
Move
Wait Wait Wait
Move
Ord
er
Ord
er
WIP
WIP
WIP W
IP
Prod
uct
Prod
uct
Prod
uct
12 days 1 day 1 day 1 day 1 day13 days 4 days 10 days 9 days
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SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol Description
D Write order
On desk
75 D To buyer
D Examine
= Operation; = Transport; = Inspect; D = Delay; = Storage
Process Chart Example
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Crossover Chart
Fixed cost - Process A
Fixed cost - Process BFixed cost - Process C
Total cost - Process CTotal cost - Process B
Total co
st - P
roce
ss A
Process A: low volume, high varietyProcess B: Repetitive
Process C: High volume, low variety
Process CProcess BProcess A Lowest cost process
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How much long-range capacity is neededWhen more capacity is neededWhere facilities should be located (location)How facilities should be arranged (layout)
Facility planning answers:
Facility and Capacity Planning
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Approaches to Capacity Expansion
Expected Demand
Time in Years
Dem
and
New Capacity
Attempts to have an average capacity, with an incremental expansion
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Breakeven AnalysisTechnique for evaluating process & equipment alternativesObjective: Find the point ($ or units) at which total cost equals total revenueFixed costs: costs that continue even if no units are produced: depreciation, taxes, debt, mortgage paymentsVariable costs: costs that vary with the volume of units produced: labor, materials, portion of utilities
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Breakeven Chart
Fixed cost
Variable cost
Total cost line
Total revenue line
ProfitBreakeven pointTotal cost = Total revenue
Volume (units/period)
Cos
t in
Dol
lars
(Tho
usan
ds)
Loss
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Crossover Chart
Fixed cost - Process A
Fixed cost - Process BFixed cost - Process C
Total cost - Process CTotal cost - Process B
Total co
st - P
roce
ss A
Process A: low volume, high varietyProcess B: Repetitive
Process C: High volume, low variety
Process CProcess BProcess A Lowest cost process
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Vary staffingChange equipment & processesChange methodsRedesign the product for faster processing
Capacity Management
Vary prices Vary promotion Change lead times
(e.g., backorders) Offer complementary
products
Demand Management
Managing Existing Capacity
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Complementary Products
Time (Months)
Sales (Units)
Jet Skis
Snow-mobiles
Total
01,000
2,0003,0004,0005,000
J M M J S N J M M J S N J
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Attaining Lean ProductionThe fundamental rethinking and radical
redesign of business processes to bring about dramatic improvements in performanceFocus on inventory reductionModulization, postponed differentiationDevelop close relationships with suppliersEliminate all but value-added activitiesReevaluating the process of planning, scheduling, and transportations across boundaries
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Techniques for Improving Process Efficiency of Service
Separation
Self-service
Postponement
Focus
Structure service so customers must go where service is offeredSelf-service so customers examine, compare and evaluate at their own pace
Customizing at delivery
Restricting the offerings
Strategy Technique
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Techniques for Improving Process Efficiency of Service
Modulizarion
Automation
SchedulingTraining
Modular selection of service. Modular productionSeparating services that lend themselves to automation
Precise personnel schedulingClarifying the service optionsExplaining problemsImproving employee flexibility