Transcript Operations Management Class 2
Class 2
Chapter 6 Chapter 8
DECISION Expand Maintain status quo Sell now STATES OF NATURE
Good Foreign Competitive Conditions Poor Foreign Competitive Conditions
$ 800,000 1,300,000 320,000 $ 500,000 -150,000 320,000 Maximums: 1,300,000; 500,000, 320,000 maximax Minimums: 500,000; 320,000; -150,000 minimin
decision/state of nature purchase apt purchase office purchase whse EV w/PI EVPI good economic conditions fair economic conditions poor economic conditions MAX MIN EMV 50000 100000 30000 0.2
20000 5000 25000 30000 15000 0.7
21000 10000 -40000 -10000 0.1
1000 50000 100000 30000 42000 10000 -40000 -10000 28500 37000 15500
Chapter 6 Products and Services
Product Design
Specifies materials
Determines dimensions & tolerances
Defines appearance
Sets performance standards
Service Design
Specifies what the customer is to experience
Physical items Sensual benefits Psychological benefits
An Effective Design Process
Matches product/service characteristics with customer needs
Meets customer requirements in simplest, most cost-effective manner
Reduces time to market - haste vs. speed to market
Minimizes revisions - quality designed into the product
Stages in the Design Process
Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation?
Feasibility Study — Performance Specifications Preliminary Design — Prototype - testing and redesign Final Design — Final Design Specifications Process Planning — Manufacturing Specifications - make to order/stock – assembly line?
The Design Process
Idea generation Product or service concept Feasibility study Performance specifications Suppliers Customers Marketing R&D Competitors New product or service launch Final design & process plans Form design Functional design Revising and testing prototypes Design specifications Production design Manufacturing or delivery specifications Pilot run and final tests
Idea Generation
Suppliers, distributors, salespersons Trade journals and other published material
Warranty claims, customer complaints, failures
Customer surveys, focus groups, interviews
Field testing, trial users Research and development
More Idea Generators
Perceptual Maps
Visual comparison of customer perceptions
Benchmarking
Comparing product/service against best-in-class
Reverse engineering
Dismantling competitor’s product to improve your own product
Perceptual Map of Breakfast Cereals
GOOD TASTE LOW NUTRITION HIGH NUTRITION BAD TASTE
Perceptual Map of Breakfast Cereals
GOOD TASTE Cocoa Puffs LOW NUTRITION Rice Krispies BAD TASTE Wheaties Cheerios HIGH NUTRITION Shredded Wheat
Feasibility Study
Market Analysis Market Segmentation Economic Analysis Technical / Strategic Analysis Performance Specifications
Not unlike mission analysis or Intelligence Preparation of the Battlefield
Risk Analysis
1. Identify the Hazards 2.
Assess hazards to determine risks.
3.
Develop controls and make risk decisions.
4.
Implement controls.
5.
Supervise and evaluate.
From FM 100-14
Preliminary Design
How will it look?
Create form & functional design
Build prototype
Test prototype
Revise prototype
Retest
Functional Design
(How the Product Performs)
Reliability
Probability product performs intended function for specified length of time
Maintainability
Ease and/or cost or maintaining/repairing product
Computing Reliability
Components in series 0.90
0.90
0.90 x 0.90 = 0.81
Computing Reliability
Components in series 0.90
0.90
0.90 x 0.90 = 0.81
Components in parallel 0.90
R 2 0.95
R 1 0.95 + 0.90(1-0.95) = 0.995
System Availability
System Availability, SA = MTBF MTBF + MTTR
System Availability
System Availability, SA = MTBF MTBF + MTTR PROVIDER A B C MTBF (HR) 60 36 24 MTTR (HR) 4.0
2.0
1.0
System Availability
System Availability, SA = MTBF MTBF + MTTR PROVIDER A B C MTBF (HR) 60 36 24 MTTR (HR) 4.0
2.0
1.0
SA A = 60 / (60 + 4) = .9375 or 93.75% SA B = 36 / (36 + 2) = .9473 or 94.73% SA C = 24 / (24 + 1) = .96 or 96%
Production Design
Part of the preliminary design phase
Simplification
Standardization
Modularity
Final Design & Process Plans
Produce detailed drawings & specifications
Create workable instructions for manufacture
Select tooling & equipment
Prepare job descriptions
Determine operation & assembly order
Program automated machines
Improving the Design
Design teams
Process
Concurrent design Design for manufacture & assembly Design to prevent failures and ensure value Design for environment Measure design quality Utilize quality function deployment Design for robustness Engage in collaborative design
Breaking Down Barriers to Effective Design
Design Teams
Preferred solution = cross functional teams
Marketing, manufacturing, engineering
Suppliers, dealers, customers
Lawyers, accountants, insurance companies
Concurrent Design
Improves quality of early design decisions
Decentralized - suppliers complete detailed design
Incorporates production process Scheduling and management can be complex as tasks are done in parallel
include the customer in the process!!
Design for Manufacture and Assembly
Design a product for easy & economical production
Incorporate production design early in the design phase
Improves quality and reduces costs
Shortens time to design and manufacture
also known as Design for Six Sigma
Design for Six Sigma
• • • • •
Define – the goals of the design activity Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality?
Analyze – innovative concepts for products and services to create value for the customer Design – new processes, products, and services to deliver customer value Verify – new systems perform as expected
DFM Guidelines
ü ü ü ü ü
Minimize the number of parts, tools, fasteners, and assemblies Use standard parts and repeatable processes Modular design Design for ease of assembly, minimal handling Allow for efficient testing and parts replacement
Design for Assembly (DFA)
Procedure for reducing number of parts
Evaluate methods for assembly
Determine assembly sequence
Design Review
Failure Mode and Effects Analysis (FMEA)
A systematic approach for analyzing causes & effects of failures
Prioritizes failures
Attempts to eliminate causes
Value Analysis (Value Engineering)
Is there value added?
Ratio of value / cost
Assessment of value : 1. Can we do without it?
2. Does it do more than is required?
3. Does it cost more than it is worth?
4. Can something else do a better job 5. Can it be made by less costly method, tools, material?
6. Can it be made cheaper, better or faster by someone else?
Should we contract it out?
Design for Environment
Design from recycled material
Use materials which can be recycled
Design for ease of repair
Minimize packaging
Minimize material & energy used during manufacture, consumption & disposal
green laws in Europe -
Examples
• •
Recycling of oil carpets in land fills - 4 billion pounds in land fills annually
•
Xerox and Hewlett-Packard - pay for return of printer cartridges on larger printers
Metrics for Design Quality
ü ü ü ü
Percent of revenue from new products or services Percent of products capturing 50% or more of the market Percent of process initiatives yielding a 50% or more improvement in effectiveness Percent of suppliers engaged in collaborative design
ü ü ü ü ü
Metrics for Design Quality
Percent of parts that can be recycled Percent of parts used in multiple products Average number of components per product Percent of parts with no engineering change orders (ULLS/SAMS/SARSS) Things gone wrong - should be identified by the returns process
Quality Function Deployment (QFD)
Translates the “voice of the customer” into technical design requirements
Displays requirements in matrix diagrams
First matrix called “house of quality”
Series of connected houses
Design for Robustness
Product can fail due to poor design quality
Products subjected to many conditions
Robust design studies
Controllable factors control under designer’s
Uncontrollable factors - from user or environment
Designs products for consistent performance
Consistency is Important
Consistent errors are easier to correct than random errors
Parts within tolerances may yield assemblies which aren’t
Consumers prefer product characteristics near their ideal values
Characteristics of Services
• • • • • • • • •
Services are intangible Service output is variable Service have higher customer contact Services are perishable Service inseparable from delivery Tend to be decentralized and dispersed Consumed more often than products Services can be easily emulated Call girl principle – value diminishes after service is rendered
A Well-Designed Service System is
Consistent with firm’s strategic focus
Customer friendly
Easy to sustain
Effectively linked between front & back office
Cost effective
Visible to customer
Chapter 8
Processes and Technologies
Process Strategy
Overall approach to producing goods and services
Defines:
Capital intensity
Process flexibility
Vertical integration
Customer involvement
Types of Processes
Projects
Batch production
Mass production
Continuous production
Process Selection with Break-Even Analysis
Total cost = fixed cost + total variable cost TC =
c f
+
vc v
Total revenue = volume x price TR =
vp
Profit = total revenue - total cost Z = TR - TC =
vp
- (
c f
+
vc v
)
Process Selection with Break-Even Analysis
Total cost = fixed cost + total variable cost TC =
c f
+
vc v
Total revenue = volume x price TR =
vp
Profit = total revenue - total cost Z = TR - TC =
vp
- (
c f
+
vc v
)
c f v c v p
= fixed cost = volume (i.e., number of units produced and sold) = variable cost per unit = price per unit
Solving for Break-Even Volume
TR = TC
vp
-
vp vc v
=
c f
=
c v
(
p - c v
) =
c f f
+
vc v v
=
c f p
-
c v
Break-Even Analysis
Fixed cost =
c f
Variable cost =
c v
Price =
p
= $2,000 = $5 per raft = $10 per raft
Break-Even Analysis
Fixed cost =
c f
Variable cost =
c v
Price =
p
= $2,000 = $5 per boogie board = $10 per board The break-even point is
v p
-
c f c v
2000 10 - 5
Process Planning
Make-or-buy decisions
Process selection
Specific equipment selection
Process plans
Process analysis
Make-or-Buy Decisions
1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise
What about Proprietary Information?
Barrier to Make-or-Buy?
Rationale for Off Shore to Low Country Source
100.00% 94.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 37.00% 10.00% 0.00% $ Savings procured goods Penet rat ion t o new market 27.00% 23.00% invent ory redux inc customer service 22.00% access new t echnology 21.00% 20.00% reduced cycle t ime log cost reductions
Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005
Specific Equipment Selection
1. Purchase cost 2. Operating cost 3. Annual savings 4. Revenue enhancement 5. Replacement analysis 6. Risk and uncertainty 7. Piecemeal analysis – “one piece at a time”
Process Plans
Blueprints Bill of material Flat or multiple layers - part or assembly Assembly chart / product structure diagram Operations process chart - list of operations involved in assembly Routing sheet - sequence of events
Operations Process Chart
Part name Part No.
Crevice Tool 52074 Usage Hand-Vac Assembly No. 520
Oper. No.
10 20 30 40 50 60
Description
Pour in plastic bits Insert mold Check settings & start machine Collect parts & lay flat Remove & clean mold Break off rough edges
Dept.
041 041 041 051 042 051
Machine/Tools
Injection molding #076 113, 67, 650 Plastics finishing Parts washer Plastics finishing
Time
2 min 2 min 20 min 10 min 15 min 10 min
Process Analysis
The systematic examination of all aspects of a process to improve its operation
Faster
More efficient Less costly More responsive Basic tools
Process flowchart
Process diagrams Process maps
Process Flowchart
Date: 9-30-02 Analyst: TLR Location: Graves Mountain Process: Apple Sauce Description of process 9 10 11 1 2 6 7 8 3 4 5 Page 1 0f 3 Unload apples from truck Move to inspection station Weigh, inspect, sort Move to storage Wait until needed Move to peeler Apples peeled and cored Soak in water until needed Place in conveyor Move to mixing area Weigh, inspect, sort Total 20 30 360 15 20 5 30 480 100 ft 50 20 20 ft ft ft 190 ft
Process Diagram
Receiving Reserve Storage Quality Assurance Active Bins Back to Vendor Picking Mono gramming Embroid ering Packing Hemming Gift Boxing Shipping UPS Parcel Post Next-Day UPS
Process Mapping
• • •
Why?
How?
Value?
Customer Place order Drink Eat salad or soup Eat dinner Receives check Gives payment to waiter Collect change, leave tip Fill in tip amount
Process Map
Waiter Salad Chef Dinner Chef N Is order complete?
Y Give soup or salad order to chef Give dinner order to chef Get drinks for customer Deliver salad or soup order to customer Deliver dinner to customer Deliver check to customer Receive payment for meal Cash or Credit?
Credit Cash Bring change to customer Run credit card through Return credit slip to customer Collect tip Prepare soup or salad order Give order to waiter Prepare dinner order Give order to waiter
Benchmark data
Process Reengineering
requirements Strategic directive data Goals & specifications for process performance Baseline analysis Innovative ideas Design principle s Key performance measures High-level process map Detailed process map Pilot study of new design Full-scale implementation Model validation
• • • •
Principles for Redesigning Processes
Remove waste, simplify, consolidate Link processes to create value Let the swiftest and most capable execute Capture information digitally and propagate
• • • • •
Principles for Redesigning Processes
Provide visibility through information about process status Fit the process with sensors and feedback loops Add analytic capabilities Connect, collect and create knowledge around the process Personalize the process
Other ways to redesign the process
• • •
Define Measure Improve
Velocity Management Methodology
• • • • •
Define Measure Analyze Improve Control
General Electric’s Six Sigma Methodology
Techniques for Generating Innovative Ideas
Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming
Information Technology
Management Information Systems (MIS)
Move large amounts of data
Decision Support Systems (DSS)
Add decision making support
Expert System
Recommend decision based on expert knowledge
Enterprise Software
Collect, analyze, and make decisions based on data
ERP - Enterprise Resource Planning
Managing wide range of processes
Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry
Finding hidden patterns through data mining
ERP
• • • • •
SAP – 42% of market; forecast to 43% Oracle – 20%; forecast to 23% Sage Group – 6% Microsoft – 4% Horror Stories – Hershey’s, Dell
Advanced Communications
Electronic data interchange (EDI) Internet, extranets Wireless communications Teleconferencing & telecommuting Bar coding, Radio Frequency Identification Virtual reality
Distance Learning?
RFID
• • • • • •
Active Tags Always on Battery powered Can be read from up to 300 ft US Army Savi Tags
• • • • • • •
Passive Tags Small Must be activated May be turned off England California Rolex
Automated Material Handling
Conveyors
Automated guided vehicle (AGV)
Automated storage & retrieval system (ASRS) Grainger/Defense Distribution Center, San Joaquin
Robotics
Programmable manipulators Follow specified path Better than humans with respect to
Hostile environments
Long hours
Consistency
Adoption has been slowed by ineffective integration and adaptation of systems
Welding at Harley Davidson Plant
Next Week
•
Chap 10, 11, and 17; Handout Mid Term