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process selection in operation management
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Operations Management
Chapter - 5
Process Selection and Facility LayoutNiranjan Sapkota
CAB
Product Design Product design defines a product’s characteristics of:
AppearanceMaterialsQualityCost DimensionsTolerancesPerformance standards
Process Selection – the development of the process necessary to produce the designed product.
Need of New Product/
technology
Productivity
Cost effectivenessChanging customer preferences
Competition
Product/Service Design
Product/service design directly affects:• Product/service quality• Production/delivery cost• Customer satisfaction
Ideas of New
Product
Research and Development
Competitor Customer
Marketing
Top Management Sales
Operation Manager
Keeping firm’s Production facility Up to date
Design and developmentOf firms products andfacilities
Entire process has to be Designed from the sketch(new company or entirely New product)
Modification of the present Facility and process(for the operating firm)
Research for the Product
Pure Research Applied Research
Totally new research for new conceptual product Needs huge money Concepts gathered from research institutes, universities
Translation of the concepts to Products in terms of man, machine, Material, method and information Applicable in the following process
The design of new products The redesign of existing product The identification of new uses for existing product The improvement of packaging of existing product
Interaction of Research
Pureresearch
Applied research
Product configura
tionPilot run
Market Research
Production process
Product Life Cycle
The study of pattern and process od product life cycle helps in determining facilitiesLabor, capital and management system needed in each stage
Operation issues in product life cycle
Introduction Growth Maturity Decline
Product variety Different varieties
Increasing Standardization
Emergence of dominant design
Commodity characteristics
Product volume
Low volume Increasing volume
High volume High volume
Industry structure
Small competitors
Fallout andConsolidation
Few large companies
Survivors
Form of competition
Product varieties Product quality and availability
Dependability And price
Price
Product Development Process
Need identification Feasibility study Advance design Detailed engineering and development Process design and development Product evaluation and improvement Product use and support
Need identification
• Starts with identification of customer need
• Should satisfy customer needs, requirements and expectation
• Pure research and applied research is used
Product planning(feasibility study)
Preliminary activitiesMarket analysisAlternative concepts of productOperations requirementsDesign criteria and prioritiesLogistic requirements for producing, distributing and maintaining the product in the market.
Conceptual design Shape Size Retail price Product
reliability Product
function
Advance Design
Product concept or design concept from feasibility concept examined technically
Concerned with developing and evaluating the design alternatives if necessary
Product Development and Engineering Analyze experiments and collect data for product
development The developed product should meet the following
objectivesFunctionalityReliability Maintainability Manufacturing
Computer analysis, simulations can be used for multiple tests Design of product with required drawing, working prototype associated with required documents is developed
Process design and developments
Prepare plans for material acquisitionProductions Warehousing Transportation Distribution
Production planning, controlling and HR system also developed
Production evaluation and improvements
Product performance in the market Short falls and difficulties in the production Result of other researches
Product use and support
Customer needs and expectations can be enhanced by
Educating the people on the application of the product
Provide warranty, repair and after sale service Improve the design of product as required
Tools to Improve Speed to Market
• Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM)– Engineers, using CAD/CAM, can generate many
views of parts, rotate images, magnify views, and check for interference between parts
– Part designs can be stored in a data base for use on other products
– When it is time for manufacturing, the product design is retrieved, translated into a language that production machinery understands, and then the production system can be automatically set up.
Tools to Improve Speed to Market
• Simultaneous(Concurrent)Engineering
Economic and TechnicalFeasibility Studies
Product/Service Ideas
Production Process DesignProduct/Service Design
Produce and MarketNew Product/Service
ContinuousInteraction
Improving the Designof Existing Products/Services
• Focus is improving performance, quality, and cost• Objective is maintaining or improving market
share of maturing products/services• Little changes can be significant• Small, steady (continuous) improvements can
add up to huge long-term improvements• Value analysis is practiced, meaning design
features are examined in terms of their cost/benefit (value).
Designing for Ease of Production
• Ease of Production (Manufacturability)– Specifications - Precise information about the
characteristics of the product– Tolerances - Minimum & maximum limits on a
dimension that allows the item to function as designed
– Standardization - Reduce variety among a group of products or parts
– Simplification - Reduce or eliminate the complexity of a part or product
Designing for Quality Crucial element of product design is its impact on
quality Quality is determined by the customer’s
perception of the degree of excellence of the product/service’s characteristics
conformance to specification Value Fitness for use Support Psychological impression
Atmosphere image or aesthetics
Designing and Developing New Services
Three general dimensions of service design are:• Degree of Standardization of the Service
– Custom-fashioned for particular customers or basically the same for all customers?
• Degree of Customer Contact in Delivering the Service– High level of contact (dress boutique) or low level
(fast-food restaurant)?• Mix of Physical Goods and Intangible Services
– Mix dominated by physical goods (tailor’s shop) or by intangible services (university)?
Designing and Developing New Services
• Differences Between New Service and New Product Development
– Unless services are dominated by physical goods, their development usually does not require engineering, testing, and prototype building.
– Because many service businesses involve intangible services, market sensing tends to be more by surveys rather than by market tests and demonstrations.
ProcessPlanning and Design
Major Factors Affecting Process Designs
Nature of product/service demand Degree of vertical integration Production flexibility Degree of automation Product/Service quality
Nature of Product/Service Demand Production processes must have adequate
capacity to produce the volume of the products/services that customers need.
Provisions must be made for expanding or contracting capacity to keep pace with demand patterns.
Some types of processes are more easily expanded and contracted than others.
Product/service price affects demand, so pricing decisions and the choice of processes must be synchronized.
Degree of Vertical Integration Vertical integration is the amount of the
production and distribution chain that is brought under the ownership of a company.
This determines how many production processes need to be planned and designed.
Decision of integration is based on cost, availability of capital, quality, technological capability, and more.
Strategic outsourcing (lower degree of integration) is the outsourcing of processes in order to react quicker to changes in customer needs, competitor actions, and technology.
Production Flexibility
Product flexibility -- ability of the production (or delivery) system to quickly change from producing (delivering) one product (or service) to another.
Volume flexibility -- ability to quickly increase or reduce the volume of product( or service) produced (or delivered).
Degree of Automation
Advantages of automation Improves product quality Improves product flexibility Reduces labor and related costs
Disadvantages of automationEquipment can be very expensiveIntegration into existing operations can be difficult
Product/Service Quality
Old viewpoint – high-quality products must be made in small quantities by expert craftsmen
New viewpoint – high-quality products can be mass-produced using automated machinery
Automated machinery can produce products of incredible uniformity
The choice of design of production processes is affected by the need for superior quality.
Process Flow Structure Project structure, where a single project is planned with a fixed end date,
such as building a house
Job shop structure, where each flow will be similar but slightly different, such as poster printing
A batch process, where each flow produces a batch of identical products, such as baking
An assembly line structure, where the flow produces a continuous supply of fixed goods, such as a car assembly line
Continuous flow structure, where a continuous supply of finished goods is produced, such as in an oil refinery
factors differentiating the different process structures
The flow – are there a large number of paths which activities can take, or is there only one possible sequence of activities.
Flexibility – will changing the output of the process, in terms of volume and products, alter the performance and / or cost of the process
Range of products – can the process produce lots of different products, or is it designed to only produce one specific product.
Capital investment – does the process require investments in expensive specialist equipment or can it use general equipment that the firm may already own or can rent
Variable costs – how high is the cost of producing each unit
Labour requirements – how much labour input is required, and how skilled must the laborers be
Volume – can the process produce lots of products, or will it only create a few, or possibly one, end product
Project Structure/technology Production of unique nature of
products like building, bridge, dam, roads etc.
Product cant be standardized and transported from one place to other
Requires specialized technology with high flexibility.
Skilled manpower Production of unique nature of
product to meet customer demand.
Job shop structure Small batches of different types of products in different sets
or sequences Variety of custom designed products in small volumes Production is generally to meet the order s of customers
rather than for stock. Less certainty in the nature , specification and quality of
goods to be produced.. Difficult to make planning of resources , scheduling of
operation and controlling activities. Standardization of raw material, process , products and other
facilities is difficult.
A batch process Improved form of job shop technology in the aspect of
standardization of products Suitable when business has relatively stable line of products Production is in periodical batches either to meet customer
order or for stock. Less difficult for planning , controlling and scheduling
production process compared to job shop technology. Eg. Electronic device manufacturing
Assembly line process
When products are relatively stable, high volume with limited variety assembly line technology is suitable
Specialized equipment, skilled manpower, and management systems are used and developed.
Production of limited range and high volume of products. Less flexible compared to job shop and batch technology. Eg. TV, Motorcycle
Continuous flow Process When products are highly standardized and large volumes are
produced for stock , continuous flow technology is used Uses standardized materials, machines, and equipment in
continuous flow to produce high volume of standardized products .
It is capital intensive technology Eg . Soap, noodles
Process life cycle
Job shop Batch Assembly continuous
Man
ufac
turin
g co
st p
er u
nit
Startup Growth Maturity commodity
Designing of service & service process Technology
Meaning and nature of service Service are experienced not consumed Requires high customer contact Requires effective management of staffs, marketing and
operation Service cant be inventoried
salt Nec
k tie ca
r Fast
food
Air t
rave
l
thea
tre
nurs
ing
Teac
hing
Serv
ice
dom
inan
cePr
oduc
t dom
inan
ce
Service business and internal service
Service Business: management of organization whose basic objective is to interact with customers to render services. Facility based: business where customer must visit the service facility to get service from organization Field based: concerned with providing service in the customer’s location and environment
Internal service: refers to services to other departments of the same organization. Therefore customers of internal service are other departments. Eg. Accounting, marketing, maintenance, research and development…
Designing of service
Identification of target marketwho are the customers? where is its market? What do customers want?
Service conceptHow our service fulfills customer needs? What are service types? How it is different from others?
Service strategyWhat is service policy? What are the priorities? what are the service packages and focus of service?
Service delivery systemWhat are the actual processes? What are the systems and facilities? Who are employees and what should be their skills and ability?
Service Process Technology
Depends on two main factors.. Customer contact
during designing or customizing of service. Eg. Building a new building
during creating or consuming of service. Eg. Hair styling
Labor vs Capital intensiveness Teaching, nursing etc are labor intensive where training
and development of employees vital for quality service 24 hour ATM/ vendor machines are capital intensive
On the basis of customer contact and labor intensiveness service process technology can be divided into four categories..
Quasi manufacturing process technology Mass service process technology Custom shop service technology Professional service process technology
Quasi- Manufacturing Process Technology
Requires low customer contact and capital intensive technology to render the service.
Offers rigid and standardized service with reliable delivery schedule.
Eg. Post Office, Telebanking
Mass service process technology
Labor intensive technology. Rigid in nature providing standardized service
to the customer. This technology requires training and
development and schedules of human resource for providing quality and effective service
Gg. Teaching, live Entertainment programs
Custom shop service technology
Provides customized service. Highly professional staffs and capital intensive
technology for providing service. Flexible but require high capital investment Eg. Hospitals, Chartered travel services
Professional service process Technology
Professional staffs provide customized service to customer through intensive interaction.
Professionals are governed by professional ethics, norms, organizational rules
Professional skills are highly flexible relating to customer need.
Eg. Legal counseling, medical diagnosis.
Service Process Technology
Quasi manufacturing technology Postal service Check processing Automated warehousing
Professional service Legal counseling Medical diagnosis Tutoring
Mass service technology Teaching Live entertainment Cafeteria
Custom shop technology Charter travel service Long distance telephone
service Medical treatment
Labo
r in
tens
ive
Capi
tal
inte
nsiv
e
Low customer contact High customer contact
Rigid process technology Flexible process technology
Research Topics
Service automation Flexible manufacturing system Computer integrated manufacturing
Layout Planning
55
What is Facility Layout
Location or arrangement of everything within
& around buildings
Determines long-run efficiency of operations
Helps achieve a strategy that supports
differentiation, low cost or quick response
56
Strategic Importance of LayoutProper layout enables: Higher utilization of space, equipment and people
Improved flow of information, materials, or people
Improved employee morale and safer working
conditions
Improved customer/client interaction
Flexibility to change--use small, movable or modular
equipment; etc
Inefficient operations
For Example:
High CostBottlenecks
Changes in the designof products or services
The introduction of newproducts or services
Accidents
Safety hazards
The Need for Layout Decisions
Changes inenvironmentalor other legalrequirements
Changes in volume ofoutput or mix of
products
Changes in methodsand equipment
Morale problems
The Need for Layout Design (Cont’d)