7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 7 Process Strategy and...

7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

77 Process Strategy and SustainabilityProcess Strategy and Sustainability

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

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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 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 Hospital

Repetitive(autos, motorcycles,

home appliances)Harley-Davidson

Product Focus(commercial

baked goods, steel, glass, beer)

Frito-Lay

High Varietyone or few units per run,(allows customization)

Changes in Modulesmodest runs, standardized modules

Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only

Mass Customization(difficult to achieve, but huge rewards)

Dell Computer

Poor Strategy (Both fixed and variable costs

are high)

Low Volume

Repetitive Process

High Volume

VolumeFigure 7.1

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Process StrategiesProcess Strategies

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. 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

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Process FocusProcess Focus Facilities are organized around specific

activities or processes

General purpose equipment and skilled personnel

High degree of product flexibility

Typically high costs and low equipment utilization

Product flows may vary considerably making planning and scheduling a challenge

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Manufacturing Process Manufacturing Process LayoutLayout

L

L

L

L

L

L

L

L

L

LM

M

M

M

D

D

D

D

D

D

D

D

G

G

G

G

G

G

A A AReceiving andShipping Assembly

Painting Department

Lathe DepartmentMilling

Department Drilling Department

Grinding Department

P

P

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Process FocusProcess Focus Many inputs

(surgeries, sick patients, baby deliveries, emergencies)

Many different outputs(uniquely treated patients)

Many departments and many routings

Figure 7.2(a)

(low volume, high variety, intermittent processes)

Arnold Palmer Hospital

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Repetitive FocusRepetitive Focus

Facilities often organized as assembly lines

Characterized by modules with parts and assemblies made previously

Modules may be combined for many output options

Less flexibility than process-focused facilities but more efficient

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Raw materialsor customer

Finished

item

Station 2

Station 2

Station 3

Station 3

Station 4

Station 4

Material and/or labor

Station 1

Material and/or labor

Material and/or labor

Material and/or labor

Used for Repetitive or Continuous Processing

Product Product FocusFocus

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• Product layout sets up production equipment along a product-flow line, and the work in process moves along this line past workstations.

• Efficiently produces large numbers of similar items.

Product Layout

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Product FocusProduct Focus

Facilities are organized by product

High volume but low variety of products

Long, continuous production runs enable efficient processes

Typically high fixed cost but low variable cost

Generally less skilled labor

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Product FocusProduct FocusNucor Steel Plant

Co

nti

nu

ou

s ca

ster

Continuous cast steel sheared into 24-ton slabs

Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

D

E F

GHI

Scrap steel

Ladle of molten steelElectric furnace

A

BC

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Mass CustomizationMass Customization

The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires

Combines the flexibility of a process focus with the efficiency of a product focus

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Mass CustomizationMass Customization

Table 7.1

Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software 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

Number of Choices

Item 1970s 21st Century

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Mass Mass CustomizationCustomization

Many parts and component 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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Requirements to Achive Requirements to Achive Mass Mass CustomizationCustomization/Build-to-Order/Build-to-Order

Mass Customization

Effective scheduling techniques

Rapid throughput techniques

Repetitive FocusFlexible people

and equipment (CIM)

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

Modular techniques

Fast Product and Process Design

CADResponsive

Supply ChainsERP

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• Description

• Type of process

• Product

• Demand

• Volume

• Equipment

• Description

• Type of process

• Product

• Demand

• Volume

• Equipment

Sequential arrangement of activities

Continuous, mass production, mainly assembly

Standardized, made to stock

Stable

High Special purpose

Process

Comparison of ProductComparison of Productand Process Layoutsand Process Layouts

Functional grouping of activities

Intermittent, job shop, batch production, mainly fabrication

Varied, made to order

Fluctuating

Low General purposee

Product

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• Workers

• Inventory

• Material handling

• Aisles

• Scheduling

• Goal

• Advantage

• Workers

• Inventory

• Material handling

• Aisles

• Scheduling

• Goal

• Advantage

Limited skills Low in-process, high

finished goods

Fixed path (conveyor) Narrow Line balancing

Equalize work at each station

Efficiency

Process

Comparison of ProductComparison of Productand Process Layoutsand Process Layouts

Varied skills High in-process, low

finished goods

Variable path (forklift) Wide Dynamic

Minimize material handling cost

Flexibility

Product

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Comparison of Three Processes Comparison of Three Processes Using Using 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

Fixed cost Process A

Fixed cost Process B

Fixed cost Process C

Tota

l cos

t

Total cost

Total cost

V1(2,857) V2

(6,666)

400,000

300,000

200,000

Volume

$

Figure 7.4

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Focused ProcessesFocused Processes

Focus brings

Less overhead costs

Less complexity

More efficiency

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Focused ProcessesFocused Processes

Focus can be on:

•Customers (Hotel owners: dishwashers)

•Products (Caterpillar)

•Service (Children hospital)

•Technology (SAP: software)

•Quality (Rolls-Royce)

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Analyzing and Designing Analyzing and Designing ProcessesProcesses

Design the process to achieve a competitive advantage

Analyze the process to eliminate the steps that do not add value

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Tools Used for Tools Used for Process Process Analysis and DesignAnalysis and Design

Flow Charts - Shows the movement of materials

Time-Function Mapping - Shows flows and time frame

Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization

Process Charts - Uses symbols to show key activities

Service Blueprinting - focuses on customer/provider interaction

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Flow Chart

Operator takes phoneorder.

Orders waitto be pickedup.

Supervisorinspectsorders.

Order isfulfilled.

Order waitsfor sales rep.

Is ordercomplete?

Yes

No

Orders aremoved tosupervisor’sin-box.

Orderswait forsupervisor.

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““Baseline” Time-Function MapBaseline” Time-Function MapCustomer

Sales

Production control

Plant A

Warehouse

Plant B

Transport

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

52 daysFigure 7.5

Move

Receive product

Pro

du

ct

Pro

du

ct

Extrude

Wait

WIP

Pro

du

ct

Move

WaitW

IP WIP

Print

Wait

Ord

er

WIP

Order product

Process order

Wait

Ord

er

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““Target” Time-Function MapTarget” Time-Function Map

Customer

Sales

Production control

Plant

Warehouse

Transport

1 day 2 days 1 day 1 day 1 day

6 daysFigure 7.5

Move

Receive product

Pro

du

ct

Pro

du

ct

Extrude

Wait

PrintOrd

er

WIP

Pro

du

ct

Order product

Process order

Wait

Ord

er

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Value-Stream MappingValue-Stream Mapping

Figure 7.6

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Process ChartProcess Charts (Allow us to s (Allow us to focus on value-added activities)focus on value-added activities)

Figure 7.7

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Service BlueprintingService Blueprinting

Helps to identify potential failure points in customer and service provider interaction

Defines three levels of interaction

Level 1: Activities under the control of the customer

Level 2: Interaction between the customer and service provider

Level 3: Activities performed invisibly to the customer

Each level has different management issues

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Service BlueprintService BlueprintPoka-Yoke (level 1): Put a bell in driveway so that Poka-Yoke (level 1): Put a bell in driveway so that

customer will be noticedcustomer will be noticedPersonal Greeting Service Diagnosis Perform Service Friendly Close

Level#3

Level#1

Level#2

Figure 7.8

No

Notifycustomer

and recommendan alternative

provider.(7min)

Customer arrives for service.

(3 min)

Warm greeting and obtain

service request.(10 sec)

F

Direct customer to waiting room.

F

Notify customer the car is ready.

(3 min)

Customer departs

Customer pays bill.(4 min)

F

F

Perform required work.

(varies)Prepare invoice.

(3 min)F

FYes

FYes

F

Standard request.(3 min)

Determine specifics.

(5 min)No

Canservice be

done and does customer approve?

(5 min)

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Improving Service Improving Service ProductivityProductivity

Strategy Technique Example

Separation Structure service so customers must go where the service is offered

Bank customers go to a manager to open a new account, to loan 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 stores

Internet ordering

Table 7.3

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Strategy Technique Example

Postponement Customizing at delivery

Customizing vans at delivery rather than at production

Focus Restricting the offerings

Limited-menu restaurant

Modules Modular selection of service

Investment and insurance selection, cell phone billing

Improving Service Improving Service ProductivityProductivity

Table 7.3

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Strategy Technique Example

Automation Separating services that may lend themselves to some type of automation

Automatic teller machines

Scheduling Precise personnel scheduling

Scheduling ticket counter personnel at 15-minute intervals at airlines

Training Clarifying the service options

Explaining how to avoid problems

Investment counselor, wedding organizer

After-sale maintenance personnel

Improving Service Improving Service ProductivityProductivity

Table 7.3

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Technologies to Improve Technologies to Improve Production and ProductivityProduction and Productivity

CNC Machinery

Automatic identification systems (AISs), RFIS

Vision system - inspection

(video camera & computers)

Robots

Automated storage and retrieval systems (ASRSs)

Automated guided vehicles (AGVs)

Flexible manufacturing systems (FMSs)

Computer-integrated manufacturing (CIM)

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CNC MachineryCNC Machinery

Increased precision

Increased productivity

Increased flexibility

Reduced changeover time

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CNC MachineryCNC Machinery

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Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)

Improved data acquisition

Reduced data entry errors

Increased speed

Increased scope of process automation

Example – Bar codes and RFIDExample – Bar codes and RFID

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Vision SystemsVision Systems Particular aid to inspection

Consistently accurate

Never bored

Modest cost

Superior to individuals performing the same tasks

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RobotsRobots

Perform monotonous or dangerous tasks

Perform tasks requiring significant strength or endurance

Generally 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

Reduced errors and labor

Particularly useful in inventory and test areas of manufacturing firms

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Illustrated concept of a Illustrated concept of a high-rise AS/RS warehousehigh-rise AS/RS warehouse

AS/RS High-Rise Warehouse

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Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)

Electronically guided and controlled carts

Used for movement of products and/or individuals

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Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)

Electronically guided and controlled carts

Used for movement of products and/or individuals

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Flexible Manufacturing Flexible Manufacturing Systems (FMSs)Systems (FMSs)

Computer controls both the workstation and the material handling equipment

Enhance flexibility and reduced waste

Can economically produce low volume at high quality

Reduced changeover time and increased utilization

Stringent communication requirement between components

7 - 47Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.ISBN 0-13-148965-8. © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

Flexible Manufacturing Flexible Manufacturing SystemSystem

A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black.

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Computer-Integrated Computer-Integrated Manufacturing (CIM)Manufacturing (CIM)

Extension of flexible manufacturing systems Backwards to engineering and inventory

control

Forward into warehousing and shipping

Can also include financial and customer service areas

Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production

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Computer-Computer-Integrated Integrated

Manufacturing Manufacturing (CIM)(CIM)

Figure 7.10

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SustainabilitySustainability ( (Four RsFour Rs))

Sustainability in production processes

1. Resources

2. Recycling

3. Regulations

4. Reputation

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SustainabilitySustainability

Resources

- doing laundry atnight to reduce electricity costs (hotels)

Recycling

BMW uses recycled plastics

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SustainabilitySustainability

Reputation

- Frito-Lay built a plant powered by solar energy in California and advertised this in its products

Regulations

- Cars with higher CO2 emissions pay higher taxes