Transcript Operations Management Process Strategy and Capacity

Operations
Management
Process Strategy and
Capacity Planning
Chapter 7
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Learning Objectives
When you complete this chapter, you should be
able to :
 Identify or Define:





Process focus
Repetitive focus
Product focus
Process reengineering
Service process issues
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Fit of Process, Volume, and Variety
Low-Volume
(Intermittent)
High Variety
One or few units per
run, high variety
(allows customization)
Changes in modules
Modest runs, standardized
modules
Changes in attributes
(such as grade,
quality, size,
thickness, etc.)
Long runs only
Repetitive Process
(Modular)
Process focus
projects, job
shops,(machine,
print, carpentry)
Standard Register
Poor strategy
Mass
Customization
(difficult to
achieve, but huge
rewards)
Repetitive
(autos, motorcycles)
Harley Davidson
(Variable costs
are high)
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High-Volume
(Continuous)
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Dell Computer Co.
Product focus
(commercial baked
goods, steel, glass)
Nucor Steel
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Production Process Flow Diagram
Customer
Customer sales
representative
take order
Purchasing
(order inks, paper,
other supplies)
Vendors
Prepress Department
(Prepare printing plates
and negatives)
Receiving
Accounting
Warehousing
(ink, paper, etc.)
Printing Department
Gluing, binding,
stapling, labeling
Collating
Department
Polywrap
Department
Information flow
Material flow
Shipping
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Types of Process Strategies
 Process strategies that follow a continuum
 Within a given facility, several strategies may be
used
 These strategies are often classified as:
Process-Focused
RepetitiveFocused
Product-Focused
Continuum
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Process-Focused Strategy
 Facilities are organized by process
 Similar processes are together

Example: All drill presses are together
 Low volume, high variety products
 ‘Jumbled’ flow
Product A
Operation
 Other names
1
2


Intermittent process
Job shop
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Product B
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Figure 7A
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Process-Focused Strategy Examples
Bank
Hospital
© 1995 Corel Corp.
© 1995
Corel
Corp.
Machine
Shop
© 1995 Corel Corp.
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Process Focused Strategy Pros & Cons
 Advantages



Greater product flexibility
More general purpose equipment
Lower initial capital investment
 Disadvantages



More highly trained personnel
More difficult production planning & control
Low equipment utilization (5% to 25%)
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Repetitive Focused Strategy
 Facilities often organized by assembly lines
 Characterized by modules

Parts & assemblies made previously
 Modules combined for many output options
 Other names


Assembly line
Production line
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Figure 7B
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Repetitive Focused Strategy Considerations
More structured than process-focused, less
structured than product focused
Enables quasi-customization
Using modules, it enjoys economic
advantage of continuous process, and
custom advantage of low-volume, highvariety model
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Repetitive-Focused Strategy Examples
Fast
Food
Clothes
Dryer
McDonald’s
over 95 billion served
Truck
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
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Figure 7.3
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Product-Focused Strategy
 Facilities are organized by product
 High volume, low variety products
 Where found


Discrete unit manufacturing
Continuous process manufacturing
Products A & B
 Other names


Line flow production
Continuous production
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1
2
3
Operation
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Figure 7C
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Product-Focused Strategy
Pros & Cons
 Advantages




Lower variable cost per unit
Lower but more specialized labor skills
Easier production planning and control
Higher equipment utilization (70% to 90%)
 Disadvantages



Lower product flexibility
More specialized equipment
Usually higher capital investment
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Product-Focused Examples
Soft Drinks
(Continuous,
then Discrete)
Light Bulbs
(Discrete)
© 1995 Corel
Corp.
Mass
Flu Shots
(Discrete)
© 1984-1994 T/Maker Co.
Paper (Continuous)
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© 1995 Corel Corp.
© 1995 Corel Corp.
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Figure 7.4
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Table 7.1
Process Focus Repetitive Focus Product Focus
1. Product: Small
quantity, large
variety
2. Equipment:
General purpose
1. Product: Long runs,
usually standardized
2. Equipment: Special;
assembly line
1. Product: Large
quantities, small
variety
2. Equipment:
Special-purpose
3. Operators broadly
skilled
3. Employees modestly
trained
3. Operators less
broadly skilled
4. Many job
instructions
4. Repetitive operations
4. Few work orders and
job instructions;
standardization
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Process Continuum
Process Focused
(intermittent process)
Repetitive
Focus
(assembly line)
Product Focused
(continuous process)
Continuum
High variety, low volume
Modular
Low utilization (5% - 25%) Flexible equipment
General-purpose equipment
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Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
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Mass Customization
Using 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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Mass Customization - More
Choices Than Ever
Item
Early
1970s
Vehicle models
Vehicle styles
Bicycle types
Software titles
Web sites
Movie releases
New book titles
Houston TV channels
Breakfast cereals
Items in supermartkets
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140
18
8
0
0
267
40,530
5
160
14,000
7-23
Late
1990s
260
1,212
19
380,000
9,865,982
458
77,446
851
340
20,000
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Questions for Process Analysis
and Design
Is the process designed to achieve
competitive advantage in terms of
differentiation, response, or low cost?
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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Tools for Process Design
Flow Diagrams
Process Charts
Time-Function/Process Mapping
Service Blueprinting
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Time Function Map
Warehouse
WIP
Plant B
Wait
Transport
Wait
Wait
Extrude
Product
Print
WIP
Plant A
Product
Wait
Order
Production
control
Product
Process
Order
WIP
Sales
Receive
product
WIP
Order
Product
Order
Customer
Move
12 days
13 days
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1 day
4 days
1 day
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Move
10 days
1 day
9 days
1 day
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Process Chart Example
SUBJECT: Request tool purchase
Dist (ft)
Time (min)
Symbol
Description
 D  Write order
 w On desk
  D  To buyer
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 D  Examine
 = Operation;  = Transport;  = Inspect;
D = Delay;  = Storage
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Process Reengineering
The fundamental rethinking and radical
redesign of business processes to bring
about dramatic improvements in
performance
Relies on reevaluating the purpose of the
process and questioning both the purpose
and the underlying assumptions
Requires reexamination of the basic process
and its objectives
Focuses on activities that cross boundaries
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