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Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Operations Management
Design of Process
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Factors Influencing Process Choices Volume: Average quantity of the products produced in a
manufacturing system Low volume: Turnkey project management firms such as
L&T and BHEL High volume: Consumer non-durable and FMCG sector
firms, Automobile, Chemical Processing Mid-volume: Consumer durables, white goods and several
industrial products Variety: Number of alternative products and variants of
each product that is offered by a manufacturing system Variety of product offerings is likely to introduce variety at
various processes in the system; alternative production resources, materials, and skill of workers
Flow: Flow indicates the nature and intensity of activities involved in conversion of components and material from raw material stage to finished goods stage
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Relationship between volume and variety
Volume Variety
Mass Production
Petrochemicals, Automobile
ProjectOrganisations
Turnkey ProjectExecution
Mid volume Mid variety
Motor Manufacturing Pharmaceuticals
High High
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Processes & Operations SystemsAvailable Alternatives
Process characteristics are largely determined by the flow of products in the operating system
Three types of flows occur in operating systems: Continuous Intermittent Jumbled
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Continuous Flow System Characterised by a streamlined flow of products in the
operating system Conversion process begins with input of raw material at
one end, progresses through the system in an orderly fashion to finally become finished goods at the final stage
Production process is sequential and the required resources are organised in stages Examples:
several chemical processing industries such as manufacture of petrochemicals, steel, pharmaceutical, cement and glass
In a discrete manufacturing industry high volume production of very few varieties (such as electrical bulbs or spark plugs)
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Paper ManufacturingAn example of process industry
Logs and chipsof wood stored
Crushing oflogs and chips
Processing of the wood
Cleaning & Bleaching
Refining theWood pulp
Drying the wood pulp
StretchingPaper rolling
CuttingFinal packing
Paper making
Pulp making
Preparatory
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Process IndustriesInvestment in spare parts
Industry Segment 3/90 3/91 3/92 3/93 3/94 3/95 3/96
Chemicals & Plastics 26.5 26.7 24.5 23.9 22.9 20.8 18.2
Polymers 38.3 35.0 35.5 39.3 39.3 36.2 34.0
Petroleum Products 14.0 11.8 12.9 11.3 9.9 12.0 10.8
Synthetic Textiles 21.5 18.6 21.1 23.7 18.4 15.4 16.1
Inorganic Chemicals 32.7 21.9 23.6 25.3 29.9 24.1 20.1
Steel 33.5 32.8 28.6 27.6 28.0 25.9 23.4
Paper & Paper products
39.5 39.2 35.0 36.5 36.2 33.2 31.4
Source: Corporate Sector, Centre for Monitoring Indian Economy, July 1997.
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Oil & Gas Exploration & Production
Refining & Marketing
LPG Naptha GasolineATF
Kerosene Diesel Sulphur Fuel Oil Bitumen
Cracker
Fuel Gas Ethylene C4s Propylene Toluene Xylene Benzene Salt
Caustic Unit
EDC
VCM
PVCPoly PropyleneMEG
EO Oxygen
Polyethylene
LAB
N-Parafins
PFYPSF
Polyester resinPolyester chips
Texturised Yarn Spun Yarn
Fabric Wool, Silk
Retailing
Textiles
Polymers& Chemicals
Refining
Oil & Gas
PG Complex
PTA PX
Hazira Complex
Jamnagar Complex
BombayHigh
Naroda Complex
Backward Integration at Reliance
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Operations Management Issues Process Industry
The notion of capacity Flow rate determines capacity Bottleneck easily identifiable
Nature of inventories Work in Progress will be minimal Inventory of Spares & Maintenance will be
high Importance of maintenance Relevance of vertical integration
Joint & Bye Products are many Exploiting processing opportunities of these
important
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Continuous Flow SystemMass production in discrete manufacturing
In discrete manufacturing various components are manufactured in discrete fashion and the final product is obtained through an assembly process
In a mass production system, the volume of production is very high and the number of variations in the final product is low Examples:
Automobile and two wheeler manufacturers, Manufacturers of electrical components such as switches
and health care products such as disposable syringes The entire manufacturing is organised by arranging the
resources one after the other as per the manufacturing sequence (known as product line structure)
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Process Design for Mass Production Systems
Pre manufacturing Activities
Machining
Fabrication
Assembly
Testing
Dedicated & Decentralised Manufacturing Support
Machining
Fabrication
Assembly
Testing
Machining
Fabrication
Assembly
Testing
Product A Product B Product C
Machine 1
Machine 2
Machine 3
Machine m
. . . Product A
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Intermittent Flow System Characterised by mid-volume, mid-variety
products/services Increases the flow complexities Flow and capacity balancing are difficult but
important Process industries use batch production methods Discrete industries use alternative methods of
designing layout issues Capacity Estimation is hard Production Planning & Control is complex
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Pre-manufacturing activities
Gear Components
Prismatic Components
Other rotating parts
Sheet Metal parts
Housings
Shafts
Assembly & Test Assembly & Test Assembly & TestProduct A Product B Product C
Dedicated Manufacturing Support for the products
Process Design for Intermittent Flow in Discrete Manufacturing
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Layout redesign to minimise complexity in Intermittent flow: An example
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Intermittent Flow SystemSources of Problems
A bad choice on structure & people issues
Leads toLeads to Complicated Material & Information Flows
TherebyThereby Making Production Planning & Control Complex
Which DemandsWhich Demands Special mechanisms to bring order out of chaos
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Special Mechanisms To bring order out of Chaos
Lot of paper work Enormous supervision/Co-ordination Progress Chasing/Expedition
All these finally result in All these finally result in Long Lead Times/Poor Delivery
Reliability Excess and Unwanted Inventory High Overhead/High Cost
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Jumbled Flow System Occurs on account of non-standard and complex flow
patterns characteristic in certain systems Highly customised items customer orders for one or a few
Examples turnkey project executor such as BHEL or L&T customised manufacturing systems such as PCB
fabricators, sheet metal fabricators, tool room operators and printing and publishing
Operational complexity arising out of jumbled flow is high
Discrete manufacturing with Jumbled flow uses a Job Shop structure
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Process flow in Job Shops
Machine 1
Machine 2
Machine 3
Machine 6
Machine 5
Machine 4
Machine 7
Job 1
Job 2
Job 3
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Jumbled Flow System Complex issue is capacity management
Considerable time is lost due to repeated setup of processes
Due to jumbled flow, crisscrossing of jobs in the system results in poor visibility. Problems are often hidden and build up of work
in process inventory takes place Cost accounting and estimation systems
are crucial as there is a constant need to quote for specific customer orders
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Process design for operationsSalient feature of alternative choices
Flow Characteristics Continuous Intermittent JumbledProduct Characteristics
High Volume, Very low variety
Mid volume, Mid variety Very high variety, low volume
Examples of production systems
Process Industry, Mass production systems in discrete manufacturing
Batch production in Process and discrete manufacturing
Project Organisations, Tool Rooms, General purpose fabricators
Issues of importance Flow Balancing, Maintenance, Capacity utilisation and debottlenecking, Backward integration
Manufacturing system and layout design, Changeover management, Capacity planning and estimation
Capacity Estimation, Scheduling, Production Control, Cost estimation
Operations Management Tools & Techniques
Line Balancing, Maintenance management, Process
optimisation, Product layout design, Flow shope scheduling, Pull type scheduling, Single piece flow design
Forecasting, Capacity Planning and estimation, Optimised production planning and product sequencing, Group Technology layout design, Materials Management
Project Management & Scheduling, Capacity planning and
optimisation, Job shop scheduling, Functional Layout design, Job order costing, Work in Process Management
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Product – Process MatrixLow Volume
Low StandardisationOne of a kind
Multiple ProductsLow Volume
Few Major ProductsHigher Volume
High VolumeHigh StandardisationCommodity Products
Continuous Flow
Connected LineFlow (Assembly
Line)
Disconnected Line Flow
(Batch)
Jumbled Flow
(Job Shop)
Satellite Launch Vehicle
Machine Tools
Auto electric parts
PolyethyleneNone
None
Source: Adapted from Hayes, R.H. and Wheelright, S.C., (1979), “Link manufacturing process and product life cycles”, Harvard Business Review, 57 (1), 133 – 140.
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Process Design Issues Service Systems Customer contact signifies
the extent to which customer participates in the preparation and consumption of service
the nature and intensity of interaction that the customer has with the entities and service personnel
the level of exposure that the customer has of the various facets of the service system while the customer is receiving the service
Degree of complexity refers to the steps and sequences in the process measured by the number and intricacy of the steps
Degree of divergence indicates the executional latitude or variability of these steps and sequences
All the three influence the service process design
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Degree of Customer ContactDesign implications
Low: Quasi- Manufacturing Medium: Mixed Service High: Pure Service
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Customer ContactImplications
Efficiency of Operations Capacity Decisions Facility Location Choices Control of Operations Effectiveness Vs Efficiency Goals
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Degree of Complexity & Degree of Divergence: An illustration
Low complexity/Divergence Process Description High Complexity/Divergence
No reservation Table ReservationSpecific table selection options offered
Self seating, Menu on the board Seating Guests, Offering MenusRecite Menu, Describe in detail all starters & other special items in offer for the day
EliminateServe Water & Starters at the beginning of the service
Assortment of salads, chips and fruit juices offered
Customer calls out his requirements Order taking processOrder takers interact with the customers at the table in constructing the menu for the guests
Pre-prepared: Fixed set of offering Salads, PapadsIndividually prepared and served at the table as per request
Just 2 or 3 choices offered StartersCustomers can choose from 20 alternatives
Only South Indian (Vegetarian) Main MenuSouth Indian, Jain, Tandoori, Chinese, Continental, Brazilian (Both vegetarian & non-vegetarian)
Payment at the counter while leaving (Cash only)
Cash PaymentMultiple choices of payments (Cash, Card, Coupons etc.)
Source: Adapted from Shostack, G.L., “Service Positioning through Structural Change”, Journal of Marketing, 51: 34 – 43.
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Service Process Matrix
Source: Schmenner, R.G. (1986), “How can service business survive and prosper?”, Sloan Management Review, Spring 1986, 21 – 32.
Service Factory•Low cost airlines•Trucking•Hotels
Service Shop•Automobile garage•Large Hospitals•Repair services
Mass Service•Retailing•Education (Schools)•Wholesale business
Professional Service•Legal services•Medicare •Home Design
Low
High
HighDegree of interaction/customisation
Degre
e o
f la
bour
inte
nsi
ty
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Flexible Manufacturing SystemDefinition
A Flexible Manufacturing Systems (FMS) is A system consisting usually of numerical control (NC)
machines Connected by an automated material handling
system. Operated under a central computer control Capable of simultaneously processing a family of
parts with low to medium demand, different process cycles and operation sequences
It is an attempt to solve the process complexities arising out of mid-volume and mid-variety parts
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Typical Machines used in FMS
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Structure of an FMS
Information flow Material flow
System Controller
Load Unload
Machine Tools
Auxiliary Equipment
Primary MHS
Secondary MHS
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Flexibilities in FMS Machine flexibility: the ease of making changes required to
produce a given set of part types Process flexibility or mix flexibility: the ability to produce a
given set of part types, each possibly using different materials in several ways
Product flexibility: the ability to produce a new set of products very economically and quickly
Routing flexibility: is the ability to handle breakdowns and to continue processing the given set of part types
Volume flexibility: is a measure of the ability to operate an FMS profitably at different production volumes
Expansion flexibility: is the capability of building a system, and expanding it as need arises, easily and in a modular fashion
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Material Handling in FMSs An automated storage system is used for large scale
bulk storage as well as for small in line buffer storage Automated Storage and Retrieval System (AS/RS) Horizontal & Vertical Carousels
An automated transport system is used to move parts and products from the storage systems to the production operations Automated Guided Vehicle (AGV) system Conveyors in a wide variety of forms such as overhead,
monorail, carry and free, power and free and under floor drag chain
Gantry and Pick & Place Robots
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Planning Premises in Process Design
Three generic planning premises are in use in operations management; Make-to-Stock: more amenable for systems with
fewer product varieties and high production volume as in the case of continuous and streamlined flow systems
Assemble-to-order: useful for intermittent flow systems catering to the mid-volume mid-variety situations
Make-to-order: organisations typically belong to manufacturer of high product variety (jumbled flow process systems) use this planning methodology
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Complexity of Operations ManagementSome indicators
Greater Variety in
• Products, Models,
• Process Routings,
• Technology choices
High
Low
Jumbled Flow
Intermittent Flow
Continuous Flow
Made to Order
Assemble to Order
Made to Stock
More stagesin Production
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Design of ProcessesChapter Highlights
Volume, variety and flow exert significant influence on process design in organisations.
Process industries and mass production systems generally have a streamlined flow of products.
Mid-volume and mid-variety manufacturing systems have intermittent flow. Capacity estimation is difficult in such systems compared to a continuous flow systems.
Project organisations and customised manufacturing systems have jumbled flow. Capacity estimation and scheduling of jobs are quite difficult. Therefore operations management complexity is high in jumbled flow systems.
A process – product matrix depicts the relationship between process flow characteristics and volume of production in any manufacturing organisation.
Mahadevan (2007), “Operations Management: Theory & Practice”, © Pearson Education
Design of ProcessesChapter Highlights…
Process design of service systems differs vastly from that of manufacturing systems. Degree of customer contact and the complexity and diversity of service offerings have a significant bearing on process design in service systems.
New technology manufacturing such as Flexible Manufacturing Systems (FMS) have the potential to simplify the flow complexities in mid-volume, mid-variety manufacturing organisations due to increased flexibility.
Made to stock, Made to order and Assemble to order approaches to planning are specifically employed in organisations having certain flow characteristics.
Volume, variety and flow characteristics determine the complexity of operations management. By a careful design of the process, some of the complexities can be minimised.
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