Operations Module Final Document in Class[1]

7/28/2019 Operations Module Final Document in Class[1]

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NATIONAL UNIVERSITY OF SCIENCE AND

TECHNOLOGY

EXECUTIVE MBA Stage II

OPERATIONS MANAGEMENT MODULE

Prepared by

Marvellous SIBANDA CE, BSc (hons) Mech Eng, MEng, MBA,MIMechE, MZwe, ACIS

February 2010


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COURSE OUTLINE

Page

SECTION I: OPERATIONS STRATEGY AND DESIGNING OPERATIONS

SYSTEMS

Chapter 1 Introduction to Operations Management 7

1.1Historical Development of Operations Management

71.2 Definition of Operations Management 7

1.3 Key issues in Managing Operations 8

Chapter 2 Operations Strategy 10

2.1 Wickham Skinners contribution 10

2.2 Operations Strategy options 11

2.3 Order winning and Order qualifier13

2.4 Tools for Analyzing or Formulating Operations strategy14

Chapter 3 Designing Products

23

Chapter 4 Designing manufacturing processes

28

Chapter 5 Facility location and layout 36

SECTION II: MANAGING AND CONTROLLING OPERATIONS

Chapter 6 Operations planning, scheduling and control

45

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Chapter 7 Managing Capacity

48

Chapter 8 Managing Quality

50 8.1What is Quality?

50

8.2Organizing for quality

51

8.3Quality gurus

54

Chapter 9 Managing Inventory

57 9.1 Introduction57

9.2 Replenishing Inventory

57

9.3 Inventory Management Models 58

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COURSE OUTLINE

Aims

The aim of any industrial, service, public sector or retail operation is todeliver goods and/or services of a quality, quantity, cost and availability thatsatisfies the customers needs while at the same time making effective andefficient use of resources. This can only be achieved by giving attention tothe design of operations systems and the subsequent competent planningand control of these operations. This course will introduce the fundamentalprinciples of the subject of Operations Management and their application. Itis intended to assist in the management of firms (industrial, service, publicsector or retail) at the micro level of the economy.

Content and structure

The purpose of this module is to explore what constitutes world classoperations management. The module will therefore cover top managementissues such as strategies. To this will be added understanding and practice ofkey operational techniques which enable delivery of these strategies. Thelearning process is facilitated through course module reading, lecturepresentations, mini-case studies and group presentations.

Topics to be covered are:

1. Introduction to Operations Management2. Operations Strategies3. Designing Products4. Designing of Manufacturing Processes5. Facility Location and Layout6. Operations Planning and Control7. Capacity Management8. Inventory and Materials Management9. Quality Management

It is expected that students will have read all the relevant module sectionsbefore each lecture. This will enhance the effectiveness of discussions duringlectures. Exercises, mini-case studies and some miscellaneous material willbe issued.

Learning Objectives

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1. To stimulate an awareness of the characteristics of operation systems andthe variousapproaches that can be adopted in their design.2. To equip individuals with an appreciation of techniques and technologiesavailable for the

control of operations.3. To provide an insight to both conventional quality control and modernapproaches to qualitymanagement based upon the principles contributed by quality gurus.

By the end of the course, students should be able to use those frameworksand techniques presented to develop strategies, design, plan and controlmanufacturing and service operations.

TeachingTeaching media will be a series of lectures supplemented by participative

discussions, case studies, analysis of scenarios and small group exercises. Allparticipants, when requested, should prepare individual notes on a case orexercise before discussion, in class.

AssessmentThe students will be assessed through coursework and a formal written

examination.

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LECTURE PROGRAMME

DAY SESSION TOPIC/ACTIVITY

1 am Introduction to Operations Management

pm Operations Strategy

2 am Operations Strategy (continued)

Case Study I

pm Designing Products

3 am Designing Manufacturing Processes

pm Facility location and layout

Case Study II

4 am Facility location and layout

pm Operations Planning and control

5 am Operations Scheduling

pm Project planning

Case Study III

6 am Managing Quality

pm Managing Capacity

7 am Managing Inventory

pm Factory Visit

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SECTION I: OPERATIONS STRATEGY AND DESIGNING

OPERATIONS SYSTEMS

CHAPTER 1: INTRODUCTION TO OPERATIONS MANAGEMENT

Learning Outcomes

At the end of this chapter, students should be able to;

Understand how the current operations system developed.

Understand what the function or purpose of an operations system is.

Know the basic operations management objectives.

Know the main problem areas in operations management.

The industrial revolution, which began in England in the 1700s, involved the

replacement of human effort with machine power and the development of

the factory concept.

1.1 Historical Development of Operations Management

Table1.1 Historical Evolution of Operations Management.

Date Key Concept Output

Disciple

1800 Industrial Revolution Factory

Management

1900 Scientific Management Mass ProductionProduction Management

& low product variety

1940 Operations research

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1960 Computers/Advanced Mass Production Operations

Management

manufacturing & high product variety

Source: Adapted from MBA module, University of Birmingham(2005)

1.2 Definition of Operations Management

An Operations manager manages an operations system.

Definition 1: An operations system is a configuration of resources

combined for the provision of goods and/or services.

Definition 2: An operations system is a system that transforms or

converts raw materials into finished goods or services

Operations Management is concerned with the design and operation of

systems that produce goods or services. It is made up of inputs

(Materials, Manpower, Machines), which are configured and combined in

a way that produces goods or services required by customers.

Operations Management Objectives

There are two key objectives which govern the activities of an operations

manager.

(a)Customer Service- the first objective is to utilize resources for the

satisfaction of the customer. This is the prime reason why they are

customers to the organization.

(b) Resource utilization- given unlimited resources any system, howeverbadly managed, may still provide adequate customer service.

An operations system must provide customer service simultaneously

with achievement of efficient operation, i.e., efficient use of resources.

Either inefficient use of resources or inadequate customer service is

sufficient to cause commercial failure of an organization.

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Operations management is also concerned with how well an

organizations resources are being utilized.

Objectives conflict- since operations management is concernedwith the achievement of both satisfactory customer service and

resource utilization, there is need to balance achievement of

both objectives. An improvement in one normally results in the

deterioration of the other. It is from this conflict that most of

Operations Managers problems derive.

1.3 Key issues in Operations Management

Problem Areas

Design and Planning Involvement in design/specification of goods or

services

Design/Specification of process systems

Location of Operations facilities

Layout of Operations facilities and material handling

Determination of capacity/capability

Design of work or jobs

Operation and Control Planning and scheduling of activities

Control and planning of inventories

Control of quality

Practice Questions

1. What are the key objectives of an Operations System?

2. What are the typical challenges that an Operations Manager

has to deal with?

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CHAPTER 2 : OPERATIONS STRATEGY

Learning Outcomes


Understand how Operations Strategy originated.

Know the Strategy options available.

Know the Performance objectives required to achieve given

strategies.

Identify tools or approaches that can be used to analyze or

develop strategies.

2.1 Wickham skinners contribution

regarded as pioneer of manufacturing strategy concept

claimed that the term manufacturing strategy was first used at

Harvard Business School in the late 1940s. During that time, words

manufacturing and strategy were seen as contradicting each

other. The belief was that Finance and Marketing gave an organizationits competitive advantage while manufacturing simply produced goods

as cheaply and as fast as possible.

In his famous article, Manufacturing Missing Link in Corporate

Strategy , which was published in the Harvard Business Review

(1969), he argued that;

o Manufacturing should be linked to corporate objectives and

marketing strategies

o Links between manufacturing effectiveness and corporate

success go far beyond ensuring high throughput and low cost, it

should include quality, product and process forms, service and

delivery.

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o He was very critical of conventional methods of operations

management which were based on principles of scientific

management and rarely neutral.

o He concluded that manufacturing can either be a competitive

weapon or a milestone for a company

o By adopting a strategic approach to managing operations, the

organization could gain a competitive edge over competitors

o If not managed correctly, operations can impede corporate

success.

These methods focused on improving efficiencies through motion and time

studies while adopting a top-down and market-oriented approach.

2.2 Operations Strategy Options

According to Nigel Slack (2001), Operations strategies available can be

described by the relevant importance of;

i. Price

ii. The characteristics of the product

iii. The degree of customer service offered

These three elements are generally accepted as repeatedly different ways in

which companies operations can compete. An operations manager would

need to establish competitive performance objectives which can contribute

to these three generic strategies.

2.2.1 Five competitive performance objectives

For operations to give an organisation competitive advantage, it has to excel

in some or all of the following performance objectives.

(a) Quality Advantage this results from making products that match

customers expectations or design specifications. This can be referred

to as MAKING IT RIGHT.

(b)Cost Advantage this results from making products cheaper than

competition. This can be referred to as MAKING IT CHEAP.

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(c)Response Advantage this result from taking less time to make and

supply the product, compared to competitors. This can be referred to

as MAKING IT FAST.

(d)Dependable Advantage this results from being able to accurately

estimate delivery dates and meeting them. This can be referred to asMAKING IT ON TIME

(e)Flexibility Advantage this results from being able to adapt/change,

either because the needs of customers changed or because of changes

in production processes, or because of changes in the supply of

resources. This entails being able to change quickly and cheaply. This

can be referred to as CHANGING WHAT IS MADE.

2.2.2. Competing on Price

Organisations opting for this strategy must be prepared to watch or offer

lower prices for comparable products and/or services. Prices lower than

competitors require lower unit costs, so a cost advantage is required. This

can be achieved through improved productivity or efficiencies. On the other

hand, unit cost is also affected by quality performance. An operation with

good quality will spend less time, effort and money correcting its mistakes.

This results in reduced unit cost.

2.2.3. Competing on Product Characteristics

Organisations competing on product characteristics have quality and

flexibility as the most prominent objectives. Where an organization chooses

to compete on technical specification or performance of its products, it

therefore has to stay ahead of competition. This implies that the operations

systems should have the necessary flexibility to interface with product

designers and manufacturing engineers, so that new or improved products

are introduced quickly or on time. On the other hand, the operations quality

performance is equally important. This prevents a common scenario where

good product design is rendered ineffective through poor quality

manufacture.

2.2.4. Competing on Customer Service

Organisations competing on customer service could realize it through

different activities,

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Supplying a product which satisfies customers

Customers receiving technical advice that solves their problems.

Shorter and dependable delivery times compared to competition

Supplying back-up service

This strategy option emphasizes on quality, response and dependability as

the most prominent objectives.

2.2.5. Linking strategy options to competitive performance

objectives

Table 2.1: Linking strategies to objectives

Price Product CustomerServiceQuality Advantage *** *** ***Cost Advantage *** ** **Response Advantage ** * ***DependabilityAdvantage

** * ***

Flexibility Advantage ** *** **

Key: Most prominent ***

Secondary prominence **

Low prominence *

Looking at Table 2.1, we can deduce that different ways of competing

require different attribute from the operations system. This is a way of

setting out priorities on implementing competitive performance objectives.

So less prominent objectives should not be totally neglected.

2.2.6. Operations overview

Figure 2.1 Strategies, Objectives and Associated Tasks

Price

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Product Competitive

Strategy

Customer Service

Quality

CostCompetitive

Performance Objectives

Response

Dependability

Flexibility

Technology

People

Systems

Manufacturing Tasks

Capacity

Organisation Interface

2.3. Order winning and order qualifiers

2.3.1 Order Qualifiers

These parameters get the product into the market place or onto the

customers shopping list. They do not, in themselves, win orders but

provide an opportunity to be considered. However, failure to provide

qualifier factors at the appropriate level will lead to loss of orders. In

this case one needs only to match what competitors are offering.

2.3.2 Order Winners

These are factors that will cause customers to choose ones products

over those supplied by competitors.

Qualifiers are not less important than order-winners, they are

different. Both are essential.

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Order winners and qualifiers are time and market specific;

they will be different from market to market and from time to

time.

2.4 Tools for analyzing or formulating operations strategy

2.4.1 The Work of Hayes and Wheelwright

In 1984, Robert Hayes and Steven Wheelwright published a book

entitled Restoring Our Competitive Edge: Competing Through

Manufacturing. This book attempted to provide guidelines for

senior executives wishing to compete through manufacturing

and so achieve levels of corporate effectiveness comparable to

the best in the world. These are contained in their framework

for analyzing manufacturing effectiveness. The framework

presents four stages in the process of improving manufacturing

effectiveness in global markets. As well as being descriptive and

explanatory, the framework is intended to provide guidance to

managers when attempting to change their manufacturing

strategies and operations. The stages identified in the

framework are as follows:

Stage 1 Minimise manufacturings negative potential

internally neutral.

Senior managers view the manufacturing function as

neutral, that is to say, it is incapable of influencing

competitiveness success. The emphasis here is to

minimize any negative influence that manufacturing

may have upon corporate and market developments.

Stage 2: Achieve parity with competitors externally

neutral

Senior managers see manufacturing as importantonly in so much as it matches the effectiveness and

efficiency of competitors in the same industry. Here

the emphasis is upon following industry practices in

managing the workforce, avoiding large step

innovations in product or process technologies, and

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viewing economies of scale and efficiency as the

most important factors in production.

Stage 3: Provide credible support to the business strategy

internally supportive

Senior managers expect manufacturing to support

and strengthen the companys competitive position.

They see the contribution of manufacturing as

deriving from and dictated by corporate objectives.

They ensure decisions made in manufacturing are

consistent with corporate and marketing strategies,

that strategy is translated in terms meaningful to

manufacturing personnel, and are proactive in

developing longer term manufacturing strategies at

the functional and factory levels.

Stage 4: Pursue a manufacturing-based competitive

advantage externally supportive

This is where senior executives see manufacturing

capabilities as a significant influence upon overall

competitiveness. So manufacturing strategy is not

merely determined by internal corporate and

marketing strategies, but allows manufacturing

executives to have a meaningful role in contributingto the development of the company and its

strategies as a whole. In some cases this will result

with the realization that manufacturing is the key

competitive weapon within the organization.

Managers can identify which stage their companies are at, in this

framework and therefore identify changes that need to be made

within the organization to progress to the next stage.

2.4.2 Schonberger and World Class Manufacturing

In the mid-1980s the term World Class Manufacturing (WCM)

began being used to describe the operations of the most

successful companies. Foremost amongst those authors

spreading this term was Richard Schonberger. Firstly ,

Schonberger had attempted to reveal that Japanese excellence

in manufacturing was not culturally bound and gave some insight

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into the methods adopted by Japanese companies. Picking up

on his theme of blending Total Quality Control and Just-In-Time

management approaches, Schonberger then attempted to show

how companies could achieve world-class status . Schonbergers

work has been criticized as being highly prescriptive and not

providing adequate framework for the analysis of production

operations to enable the development of manufacturing

strategies in given situations. However, World Class

Manufacturing as a concept has found favour and caught on

widely amongst practitioners as a goal to be attained. In this

respect, the following provides useful definitions of that WCM

status means:

1. Becoming the best competitor

Being better than any other company in your industry inat least one aspect of manufacturing.

2. Growing faster and being more profitable than

competitors

3. Hiring and retaining the best people

Having workers and managers who are so skilled and

effective that other companies are continually seeking

to attract them away from your company.

4. Developing an excellent engineering staff

5. Responding quickly and decisively to market changes

Being more flexible than ones competitors in

responding to market shifts or price changes, and

getting new products into the market faster than they

can.

6. Practising simultaneous or concurrent engineering:

Being able to develop products and processes in parallel

and so cutting time to market down below that of

competitors.

7. Continually improving facilities, systems and people

skills

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The emphasis on continual improvement is probably the

ultimate test of a world class organization.

It is acknowledged that the various contributions to theliterature reviewed above have raised the profile of

operations within organizations and have highlighted the

importance of operations in the achievement of corporate

objectives. However, most of this work tends to be largely

promotional and highly prescriptive without providing any

meaningful structure of the detailed analysis of operations

decision making. Two approaches to the analysis and

formulation of operations strategy have recently been

produced, however, which seek to provide practical

guidelines in the development of strategies for production.They are Hills Framework and the Cambridge Groups

methodology.

2.4.3 Hills Framework for Analyzing Manufacturing

Strategy

The Hill Framework relates well to the previous attempts of

Ray Wild who had considered the role of operations in

business policy and set up a policy framework, a feature of

which was the interaction of the operations managementfunction with the external environment at all levels (Wild,

1980).

Hill bases his framework upon the following premise:

The need for strategic difference in production/operations

is, therefore, a prerequisite on which to build a sound and

successful business. To accomplish this it is necessary for

business to recognize relevant issues at two levels:

1. How to develop relevant production and operations

functional inputs to the corporate strategy debate.

2. To be aware of the different approaches at the

operational level within operations management so that

appropriate consideration can be given to alternatives.

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Hill summarizes his arguments and discussion within his

framework for reflecting production/operations strategy

issues in corporate decisions. This framework is

reproduced in Figure 2.1. Fundamental to the frameworkis an understanding of how products win orders in the

market place, step three in his framework. As shown in

the diagram, these include price, quality, delivery, service,

responsiveness to change, and technical performance. In

turn, it is argued that the mix of these comes from two

major sources, originating from the customer or market as

reflected in corporate strategies on the one hand, or

generated from the inherent features of the production

system on the other (as indicated by the arrows on the

diagram). The manufacturing organization must identify

the order-winning criteria for its products; i.e. the correct

balance between the factors detailed above, and then

reflect these in corporate objectives, market strategy and

production systems design. The five steps in the

framework are defined as:

1. Define corporate objectives.

2. Determine marketing strategies to meet these

objectives.

3. Assess how different products/services win orders

against competitors.

4. Establish the most appropriate mode to manufacture

these sets of products or provide these sets of services-

process choice.

5. Provide the infrastructure required to support the

production/operations process.

Figure2.1 Hills Framework

Step 3

Step 1 Step 2

HOW DOPRODUCTS MANUFACTURING

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WIN ORDERSIN OPERATIONS STRATEGY

THE MARKET Step 4 Step 5

Price

Quality

CORPORATE MARKETING Delivery PROCESSINFRASTRUCTURE

OBJECTIVES STRATEGY Service CHOICEResponsiveness to

Change

Technical

Performance

Source: Source: T Hill, Manufacturing Strategy: Text and Cases, 2nd edn,

Basingstoke, Macmillan now Palgrave Macmillan (2000

Hill sees nothing unique about this process which he says

essentially comprises the classical steps in corporate planning.

However, he regards the current situation as one where

corporate decision makers see only the first three as an

interactive process with feedback loops at each stage of

development. Process choice and infrastructure, the production

systems design issues, are simply seen as linear and

deterministic by most senior executives. It is argued that

operations strategy (i.e, steps 4 and 5) should also interact in an

interactive manner with the first three steps: that operations

manager should enter the corporate debate. Also he sees

operations facilities as possibly providing areas of advantage

which are frequently overlooked in strategic formulation, hence

the arrow from steps 4 and 5 back to step 3. This notion fits well

with the view of operations as a competitive weapon and the

concept of competing through manufacturing. The Hill

Framework demonstrates how market and competitive decisions

are, and should be linked with decisions on production systemsdesign. Moreover, it explores the relationship from the bottom

up and illustrates how excellence in operations can provide

order-winning characteristics for products and services which

may not have been recognized as winners by corporate decision

makers and marketing managers. The framework can be used in

two ways. It can firstly be utilized for the assessment and

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evaluation of the effectiveness of operations in relation to

corporate objectives and product markets. Secondly, it serves as

a guide for developing new, market focused strategies and

systems in operations. As such, it represents a significant

contribution to the study of operations strategy and process

decision.

Hill argues the need for strategic difference in operations as

well as in marketing strategy. This recognizes that different

parts of the operations system serving different customers or

markets should be operated separately. This necessitates

distinctive process and infrastructure choices to initiate a high

degree of market-focus. Second is the need to link marketing

and operations in order that their strategies interrelate and

complement one another. Thirdly, there is the need to identify

and distinguish between order-qualifiers and order-winners.

Qualifying criteria are those that get a companys product into

the market place or on to customers shortlists and keep them

there, while order-winning criteria give the product superiority

and thereby competitive edge over the offerings of competing

organizations. To be successful, therefore, companies should

seek to convert order-qualifying criteria that merely get them

recognized as a component supplier of manufactured goods into

order-winners so that their products are more attractive to

customers than those of their competitors.

2.4.4 A methodology for developing operations strategy

has been devised at Cambridge University and has

been widely publicized by the UK Department of

Industry (DTI) under its Enterprise Initiative. The

methodology provides guidelines for practitioners in

developing their objectives for manufacturing. The

framework of the methodology is shown in Figure

2.2. It covers such issues as determining market

requirements, competitor threats, performance ofexisting systems, and how to combine all these into a

comprehensive and meaningful blueprint for

production. A key feature of the methodology is

that, through the use of worksheets which the user

completes, it not only performs an analysis of the

market and competitive environment within which an

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organisation operates, but also conducts an audit of

existing operations, facilities and competencies. In

this way, it looks for areas in which system

performance may be improved and to better align

operations to the market needs.

The methodology involves three main phases. Stage one

involves generating basic data on product families which

indicates the importance of the family to the business and the

strength within current markets. The competitive criteria for

each family are then determined (e.g., price, delivery

performance, etc) and the organisations current performance

against these criteria is assessed. Finally, potential areas of

product profitability and vulnerability within the business are

identified.

Stage Two involves an assessment of current operations strategy

and analyses this in nine areas, namely:

Facilities: the manufacturing factories, including number,

size, location and focus

Capacity: the maximum output for each factory.

Span of process: the degree of vertical integration

Processes: the transformation activities and the way they

are organized

Human Resources: the people-related factors.

Quality: the means of assuring product, processes and

people operate to specification

Control policies: the operations planning/control guidelines

and philosophies of manufacture.

Suppliers: Relations and methods to ensure delivery of

input materials.

New products: The mechanisms and processes for

managing new product introduction.

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Figure 2.2: DTI/Cambridge Group Methodology for the

Development of Manufacturing Strategy

STAGE ONE; UNDERSTANDING THE MAKET POSITION

DETERMINE WHAT THEMARKET WANTS

RECORD HOW THESYSTEMS PERFORMS

IDENTIFYOPPORTUNITIESAND THREATS

STAGE TWO: ASSESS MANUFACTURING OPERATION

EVALUATE THE EXISITINGMANUFACTURING SYSTEM

STATE THREE: DEVELOP NEW STRATEGY

DETERMINE WHAT IMPROVEMENTSNEED TO BE MADE

REVISE MANUFACTURINGSTRATEGY

Source: MBA module, University of Birmingham(2005)

Stage three involves using the results of the analyses conducted

in Stages One and Two and developing a new operations

strategy linking manufacturing activities with corporate strategy

and market needs. The processes in this strategy formulation

are identified as:

1. Select the most important product families, based upon

assessments of the relative contributions to profits, growth

potential or market share or overall market size, and current

strength within markets.

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2. Taking each family in turn, compare the market competitive

criteria with the achieved performance.

3. Identify the operations policies which contribute to any

mismatch between the competitive criteria and the actual

performance.

4. Identify the weaknesses of the policies.

5. Consider opportunities and threats.

6. Identify possible actions and strategic choices.

7. Repeat for other families

In summary, the DTI/Cambridge Group methodology is a means

of linking operations systems choices with corporate andmarketing strategy. The originators suggest that the

methodology can be used in two main ways, both for auditing

existing operations activities in order to identify current

strengths and weaknesses, and as a framework for reviewing

operations strategy and developing a new one if need be. As

such, it not only provides a useful insight into the process of

operations strategy formulation, but also suggests a practical

approach by which organizations might arrive at appropriate

strategies for production and market-focused systems

development.

Practice Questions

1. What strategy options are available to an Operations Manager?

2. How would you use Hills Framework to analyse an organizations

strategy?

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CHAPTER 3: DESIGNING PRODUCTS

Learning Outcomes


Know how to manage product design process

Identify typical considerations when designing a product.

3.1 Managing the Design Process

In the development of new products a number of key

organizational issues must be addressed, particularly with

respect to the marketing, design and manufacturing interfaces.

This causes considerable problems that frequently need to be

overcome in the management of product introduction

programme. A dichotomy exists when people from different

functional backgrounds are brought together on product

development programme. Production managers seek order,

stability and standardization, whereas Design and Marketing see

the need for change and frequent adaptation to customer needs.

A simple, but typical design process for a new product is shown

in Figure 3.1 whereby customer or market needs are determined,

then converted into a product specification which leads onto the

design and development of the product and, eventually, its

manufacture. However, once in manufacture, the market must

continue to be evaluated, hence the circular interactions of

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future redesigns and product developments. So, despite the

diagram being simple in concept, underpinning it is a great deal

of complexity that needs to be effectively managed and

controlled.

Important components in the management of product design

frequently include:

The Product Specification

Detailing the exact type of product to be designed, the

technical expectations, styling, operational needs, cost

constraints, etc.

The Project Brief

Giving wider terms of reference concerning project

costs, time scales, project management reporting, etc.

The Solution

Evolving a design solution can involve brainstorming,

sketches, the use of CAD, canvassing customers on

alternative design options: the imaginative part of

product design.

Product Development

The testing, prototyping, experimentation, and

continual improvement of emergent designs.

Legal Aspects

Design management requires a detailed consideration

of the legal aspects of design including product liability

and patent laws.

3.2 Simultaneous or Concurrent Design Engineering

A key issue in the product design process is the management of

the interface between the design and operations function. All

too frequently these work in isolation, with product design

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engineers designing the product from the marketing

departments specification and then passing this on to the

manufacturing and process engineers who will incorporate into

existing systems or develop new processes as appropriate. This

approach, sequential engineering, can often be very time

consuming with a high number of design iterations between the

design and production functions. Simultaneous engineering

(also known as concurrent engineering), however, involves the

parallel development of products, processes and production

organization. This, it is argued, can not only drastically cut time

to market for new products but may also develop a right first

time (quality by design) attitude in the product design process.

3.3 Design for Operations/Manufacture

It is necessary to distinguish between product design activity forwhich there is no existing production systems and those

situations where the new product needs to be capable of being

produced within processes. In the former situation, the product

designer has considerable degrees of freedom, whereas

designing to suit an existing system can constrain the designers

creativity. In the majority of design cases this constraint needs

to be acknowledged: here the need to design products

compatible with existing systems (commonly known as design

for manufacture-DFM) becomes a key issue. When designingproducts for operations, consideration needs to be taken of the

type of facilities and processes available, handling and storage,

existing skills, the policy concerning sub-contraction, the fit with

the current product mix, current suppliers and existing materials,

machine utilization and quality standards, etc.

For maximum product efficiency, the critical requirements of

compatibility must be satisfied. However, a word of warning:

production compatibility is only one dimension in product

decisions. Should design be constrained in all circumstancesusing design for manufacture concepts? And what about the

important issues of satisfying customer needs and the need to

encourage design creativity? Too much compatibility can lead to

uncompetitive products and a failure to invest in new process

technology. Despite the attractions of design for manufacture,

including that of variety reduction, it can inhibit long-term

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development of an organization with a reluctance to follow

market trends or to diversify.

3.4 Product Redesign and Value Analysis

Design should not stop with the launch of a product/service. Itshould continue through the life cycle in the form of reviews and

redesign. Redesign could be prompted by a change in market

needs, or may occur in a structured manner with timed reviews.

Product and service redesigns should not be left to evolve in an

adhoc fashion, occurring only at crisis points. Rather, they

should be a planned and proactive, not a reactive, activity. Good

product design is a major determinant of high quality and

economical products and services. A team-based approach,

focusing on improving design, therefore seems appropriate

which involves participation and involvement from the teammembers from a range of functional backgrounds. Value

analysis (VA) is such an approach. VA is an analytical technique

that purports to examine all the cost components of a product or

service in relation to all its functional and quality elements.

The objective is to reduce the direct cost of the product/service

whilst maintaining or improving its value to the customer. The

essence of VA is that it uses a multi-disciplinary team whose

members come from different functions and specialization within

the organization. VA operates by identifying value features or

specific functions of the product (economic, technical, aesthetic,

ergonomic and environmental), examining alternative ways of

achieving these, and choosing the way that entails least cost

coupled with maximum satisfaction for the customer. The VA

team tackles the project by progressing through five stages of

product redesign analysis: familiarization, speculation,

evaluation, recommendation and implementation.

Familiarisation

All team members should become fully familiar with the

product/service under analysis and its components and so

need to consult drawings, specifications, cost breakdowns

and see the physical parts and their construction. The

team can draw on the expertise of its individual members

whereby the accountant might collate and explain the

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significance of the cost information, the designer can

illuminate upon the original design concept, the

manufacturing engineer can detail the steps in the

manufacturing process, the marketing representative can

give informed opinions upon customer perceptions and the

value features of the product, and so on. All the

information gathered should be recorded for use in the

next four stages of the VA exercise.

Speculation

This is the most creative stage of the VA process, but

should nevertheless be conducted in a structured way.

The VA team takes each component of the product/service

in turn and subjects it to critical examination. A checklist

should be used to include such questions as Can weeliminate it?, Can we use alternative materials?, Can

we use an alternative supplier?and Can we manufacture

it/provide the service in a different way?. Brainstorming

techniques may well be employed to generate a wide

range of uninhibited suggestions for each component,

although the team should follow up any seemingly

productive ideas to analyse their effect on the rest of the

product/service and its overall cost and value. A smaller

number of feasible or desirable changes will result fromthis.

Evaluation

At this stage the team evaluates the design changes

emerging from the Speculation Stage in more detail. The

total effect of each alteration should be examined. When,

and only when an alteration adds value for no additional

cost, or maintains value at lower cost, will that change be

forwarded for recommendation.

Recommendation

Normally the team will produce a report containing their

recommendations and then formally present these to

senior decision makers within the organization. This allows

for discussion and clarification of the recommended

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changes and those areas in which the existing product or

service design could be improved. Decisions need to be

taken which, in the opinion of the senior managers, will

maximize design improvement, maximize cost savings or,

more likely, a balance of each.

Implementation

The team should be in some way involved in following

through and implementing those changes that have been

sanctioned and then finish their analysis by calculating the

degree to which the anticipated cost savings and increased

value to the customer have been realized in practice.

VA is a technique applied to the improvement of existing

products and services. However, once its concepts have beenused and appreciated by team members, these can be extended

to the design ofnew products and services. Value Engineering

(VE) is the term used for the application of value analysis

techniques to the design stages of new products/services. The

ultimate purpose of VE is to secure improved performances for

new products and services at the minimal cost. By virtue of its

approach, it also seeks to develop a right-first-time approach in

the design of products and services.

Practice Questions

1. What are the typical stages involved in product design?

2. Why is it important to consider how a product will be

manufactured while still designing?

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CHAPTER 4: DESIGNING MANUFACTURING PROCESSES

Learning Outcomes


Identify the available options of designing manufacturing system.

Know the advantages and disadvantages of the different options of

designing manufacturing systems.

Production and service operations cover a wide range of different

situations. One could say that each operations system has its own

distinctive features and so generalization to develop any form of

systems design theory is impossible. However, there exists a need todevelop a rationale for classifying systems so that each case is not

treated as separate and unique. Consequently, an approach has been

developed which identifies common features as a means of classifying

operations systems. The parameters shaping systems design have

been identified as human resources (i.e., the organization of work),

physical facilities (the layout and arrangement of facilities) and

demand (its level and pattern). This, in turn, has enabled the

development of generalized approaches in their design, planning and

control.

The parameters of human resources, physical facilities and demand

have given the rise to the widely agreed categorizations of job,

batch and flow for conventional operations systems. These

categories are summarized in Table 3.1 and will the characteristics and

features of each will now be described in turn (see summary in Table

3.2).

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Table 3.1: Categorisation of Production Systems Design

Parameter Job Batch Flow

WorkOrganisation

ProductOriented

ProcessOriented

Task Oriented

Facilities Layout Fixed Position Functional Product

(Sequential)

Nature andLevel ofDemand

Low and/orUnique

Medium and/orIntermittent

High and/orContinuous

Table 3.2: Features of Conventional Production Systems

Type Advantages Deficiencies

Job Flexibility (product)Low fixed costJob enlargementSimple Planning

Low resource utilizationLong set-up timesDuplicationHigh training needs

Batch Flexibility (routing)Specialisation (tasks

and supervision)Isolation of processesPriority changes

High work-in-progress(WIP)

Frequent set-upsExtensive movementLong throughput times

Flow Few set-upsLow WIPMinimum movement

Human problems(recruitment, staffturnover, monotony,

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Low skillHigh specializationEasily automated

absenteeism, etc.)Physical problems (highcapital, cost, inflexibilityfor product andsequence, reliability,

etc.)

3.2.1 Job Systems

A job system is appropriate where demand is low or unique (one-

offs) and incorporates facilities layout by fixed position, where

resources and materials come to a single location and products are

then manufactured complete. The work design here is thus product

oriented, meaning that the job content of people within the system

centres upon the manufacture of the product in a make-complete

sense.Job systems demand operators with a wide range of skills and

adaptability to cope with the wide range of tasks demanded of them.

Thus there is ample scope for job enlargement in work design.

Additionally, planning activities are simple, with all materials and

resources coming to one point of use and being made complete.

However, job-type work designs demand a highly skilled workforce, so

training needs and costs tend to be high. Where volumes increase, the

only way that job systems can cope is through duplication of existing

facilities with subsequent low resource utilization. Thus, despite theattractions for operator work design in job environments, other types

of systems usually need to be adopted for higher demand situations.

3.2.2 Batch Systems

The second category of system is that of batch. A batch system

possesses a functional layout whereby similar machines or processes

are grouped together and materials move between those processes in

the manufacture of individual products. Batch systems are used in

medium or intermittent demand situations or where production rates

exceed the rates of demand. The main justification for moving from a

job to a batch is the increased utilization of resources at individual

facility locations.

The work design within batch systems is process oriented, with jobs

directed to the functional area within which the operator is working. A

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major argument for the use of batching is that it offers a high degree

of specialization, both in terms of operating tasks and supervision.

Batch systems have a number of deficiencies, however. These include

the tendency to hold high work-in-progress due to the queuing

inherent in the system, frequent set-ups as processes change from oneproduct or service type to another, extensive movement of materials

and/or people through the process, and generally long throughput

times.

3.2.3 Flow Systems

The final type of conventional system in the classification is the flow(or line) system. Flow systems are used for situations where demand

is high or continuous and the rate of production matches that of

demand. Processes are laid out in sequence and work organization is

task oriented, with operators performing a confined task or restricted

number of tasks on a repetitive cycle.

Much has been written in criticism of flow systems, but the logic

underpinning the system is that the high specialization and balancing

of the line enables products to be produced quickly and efficiently with

a minimal number of set-ups and materials movement. In terms ofwork design, the benefits frequently quoted include the ability to use

low skilled labour, economies of scale through a high specialization of

tasks and, more recently, the ease of automation of the simple and

repetitive tasks performed.

Flow systems have been seen to experience many human problems

when in operation through monotony and boredom at work. As a

result of these specific difficulties in operating, flow systems have

included line-pacing for workers, recruitment, high staff turnover and

absenteeism, poor quality through a lack of commitment, and a high

incidence of industrial relations problems developing.

Table 3.3 Selected business implications of process choice

Typical characteristics of process choice

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AspectsProject Jobbing,

Unit orone off

Batch Line Continuousprocessing

PRODUCTSANDMARKETS

Type ofProduct

Special/smallrange ofstandards

Special Standard Standard

Product range Wide Wide Narrow:standardproducts

Verynarrow:standardproducts

Customerorder size Small Small Large Very large

Level of productchangerequired

High High Low andwithinagreedoptions

None

Rate of newproductintroductions

High High Low Very low

What does acompany sell?

Capability Capability Products Products

How are orderswon?

Orderwinners

Deliveryspeed/uniquedesigncapability

Deliveryspeed/uniquedesigncapability

Price Price

Qualifiers Price /deliveryreliability/quality

Price/deliveryreliability/quality

Quality/deliveryreliability

Quality/design/Deliveryreliability

Quality/designDelivery/reliability

MANUFACTURINGNature of theprocesstechnology

Orientatedtowardsgeneralpurpose

Universal Dedicated Highlydedicated

Processflexibility

High High Low Inflexible

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ProductionVolumes

Low Low High Very High

Dominantutilization

Mixed Labour Plant

Changes inCapacity Incremental Incremental SteppedChanges

KeyManufacturingtask

To meetspecification/deliveryschedules

To meetspecification/delivery dates

Low costproduction

Low costproduction

INVESTMENTAND COSTLevel of investment

Low/High Low High Very High

Level of inventory

Components/raw material As required As

required/lowOftenmedium

Planned withbufferstocks/low

Plannedwith bufferstock

Work inProgress

High1 High1 low low Low

Finished goods Low Low High2 High3

Percent of total costsDirect labour Low High Low Very Low

Directmaterials

High Low High Very high

Site/plantoverheads

Low Low

INFRASTRUCTUREAppropriateorganisational

Control Decentralised/ centralized

Decentralised Centralised Centralised

Style Entrepreneuri

al

Entrepreneuri

al

Bureaucratic Bureaucrati

cMost importantproductionmanagementperspective

Technology Technology Business/people

Technology

Level of specialistsupport to

High Low High Very high

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manufacturing

1This would depend upon stage payment arrangements.2 However, many businesses here only make against customer schedules, or on receipt if acustomer order.3 The finished goods inventory i.e. for instance, oil refining is stored in the post-processing

stages of distribution and at the point of sale.Source: T Hill,Manufacturing Strategy: Text and Cases, 2nd edn, Basingstoke,

Macmillan now Palgrave Macmillan (2000), p118-119

Batch You can group the products being produced e.g. where the product

must be kept in order to mature. Most commonly used process type but

difficult to control.

Mass production/ Assembly line/ flow line Derives name from car assembly

systems

The other 3 are called discontinuous/ discrete processes and the last is

continuous. Continuous mainly for products that are difficult to separate

e.g. oil, electricity

Table 3.4 Characteristics of manufacturing processes

Typical characteristics of process choice1

Some relevantproduct/market,manufacturing andinfrastructure aspectsfor this community

Jobbing,unit one-off

Batch Line

PRODUCTS AND

MARKETSProduct range

Wide Narrow

Customer order size Small Large

Frequency of changeProduct

Schedule

Many

Many

FewFew

Order winners Delivery

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speed / uniquecapability

Price

MANUFACTURINGProcess technologies

Flexibility

Time

Volumes

Ability to cope with change

Product

Schedule

Set-ups Number

Expense

Manufacturings key task

Generalpurpose

Flexible

Long

Low

High

High

Many

Inexpensive

Meet deliveryrequirements

Dedicated

Inflexible

Short

High

Low

Low

Few

Expensive

Cost reduction

INFRASTRUCTUREOrganisational control

Style

Decentralised

Informal

Centralised

Bureaucratic

Source: T Hill,Manufacturing Strategy: Text and Cases, 2nd edn, Basingstoke,

Macmillan now Palgrave Macmillan (2000), p150-151

Practice Questions

1. In what situation would it be appropriate to use a jobbing system?

2. What are the characteristics of a continuous or process system?

Line balancing: Everyone/ every machine must have the same amount of

work. In an unbalanced line there is no smooth flow either one machine is

producing at a faster rate that what the receiving can process.

According to the Japanese waste should be avoided (overproduction is waste,

unnecessary movement of product without adding value, variance

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CHAPTER 5: FACILITY LOCATION AND LAYOUT

Learning Outcomes


Identify key considerations that affect the selection of a location.

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Understand the role of facility layout.

Know how to design a detailed layout.

5.1 Facility Location

Choosing a location for an operations facility is a significant decision

because, once it has been built, organizations maybe committed indefinitely

to the site. Examples of these facilities include hospitals, universities, retail

outlets, warehouses or manufacturing plants. As such, much time and effort

should be put into identifying and assessing key factors that have a bearing

on this decision, since the size and binding nature of this kind of investment

makes relocation difficult to justify. The main objective that must be used to

select one location over the other, is to secure the best net gains for theorganization. This objective can be segmented into the following aspects:

fixed cost factors like development costs to prepare the facility for use

now and in the future, and the fixed cost of doing business in a

particular country or area.

variable cost factors arising from operating or trading when producing

or providing goods and/services to customers. Distance and

transportation to customers and suppliers or proximity to key

resources or accessibility will affect these costs. Other variable costsare labour costs and energy costs. E.g. locating in lower labour cost

areas has given many organizations significant competitive advantage.

revenue factors like the impact on sales revenue that a location is able

to make, e.g., proximity to key markets or how a location can facilitate

offering of better service to customers.

subjective factors like individual preferences, attitudes of present

employees, industrial disputes, absenteeism, labour turnover.

5.1.1 General factors influencing location

These factors should be considered before one looks at the specific issues

about a location.

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Existing location as organizations grow , there may be a need to

select a suitable new location; however, the cost of relocating the

existing business can be prohibitive. The existing location may have

been selected because of its proximity to key resources or simply

because it was near the founders residence. The significance of these

factors may have changed with time.

Politically based constraints countries may ask multinational

companies and other organizations to build facilities for value addition

rather than importing finished products or exporting raw materials.

This is one reason why Japanese car makers have plants in the USA

and Europe.

Technology developments while physical proximity to customers and

raw materials remains an important factor, its significance can be

diluted by advances in technology and electronic communication.

New countries opening up opportunities may arise from countries

that were closed to investors due to political positions or other

unfavourable conditions like war. So being close to new markets, low

labour costs and opportunities to take over struggling, existing

operations, has influenced a number of location decisions.

5.1.2 Factors influencing location in a continent, region, country,area or city

These are specific factors that affect the choice of a location

Well-developed infrastructure access to reliable road and rail

transport systems will be high on an organizations list of

requirements, especially those handling high volumes. Other key

requirements would be reliable communication systems, power

supplies and water supplies.

Proximity to key markets it is an accepted principle that goods and

services be produced as close to the market as possible. However,

developments in technology have limited this benefit to certain types

of products where there will be gains in lower distribution costs and

shorter distances to preserve aspects like product freshness.

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Hospitable business environment business climate is a key

consideration. Issues like free trade environment, opportunities to

create wealth, enabling environment are important in attracting

investors.

Availability of key skills being able to find suitable and sufficientlevels of skills is fundamental.

5.1.3 Site specific factors

These are normally considered as the final stage of site evaluation.

adequate parking space

low rental costs and taxes

suitability of existing space with respect to intended use

room for future expansion

high traffic volumes may be a plus as long as it does not affect

accessibility

convenient entry and exit to major roads or closeness to public

transport pick-up points

proximity to competition

5.1.4 Location Techniques

Site availability is based on opportunistic factors and cost reduction

incentives like government grants and favourable tax rates. It is possible to

also do a quantitative analysis as a tool that helps identify an optimal

location. The most commonly used approaches are weighted-factor method,

centre of gravity method and transportation method or algorithm.

5.1.4.1 Weighted-factor method this method is applied to a limited

number of sites. The organization uses its experience to isolate factors that

are important for sales revenue, as an example. These factors are given a

rating or score of how prevalent they are per given site. The typical rating

used is 0 -10. The higher the score, the more prevalent a factor is to the site.

The second key parameter reflects the weighted importance of the factor to

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the overall location decision. The total weighting of all factors must add to

100%. The product of the weight of the factor and the score is calculated and

added for each site. The site with the highest total is the optimum one.

5.1.4.2 Centre of gravity method this method seeks to strike a balance

between a set of variances concerned. An example could be selecting alocation to build a warehouse that will supply stocks to five stores located in

different areas of a town. The centre of gravity will identify the lowest

distribution cost for the new warehouse. This is done by first developing a

site map which shows where all the stores are located. Then a reference grid

is superimposed on this map, so that we can have coordinates to the shops

or distance to the shops from a reference point. Then a table showing the

number of trips to the respective sites per given period, like a week, is also

generated. The centre of gravity is obtained by calculating X and Y means,

using the formula below:

where Xi = site location on the X axis of the reference

grid

Ai = weekly delivery trips to each store

where Yi= site location on the Y axis of the reference grid

Ai=weekly delivery trips to each store

5.1.4.3 Transportation algorithm It is clear from discussions above thatmany other factors other than transport costs are likely to affect theselection of a location. However, minimization of transportation costs may beone of the significant factors being considered. It is commonly used to selecta warehouse relative to key markets or a manufacturing plant relative to itskey resources and customers. This will be achieved by following the followingobjective;

where L=Total transport cost to and from the facility to be located

Ti=Transport cost per unit distance per unit quantity for movingbetween the facility and

existing location .

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Qi=Quantity to be transported between facility and existing location .

Di=Distance between facility and existing location I for n locations

If we consider the movements between facility and supplier or customer tobe in rectangular form, we can use Cartesian co-ordinates to represent

distances Di as:

where xi and yi indicate existing location of a supplier or customer I, andx and y give the

location of the facility. Hence:

We then need to develop a procedure to identify value for x and y which

minimize L.

5.2 Facility Layout. - Arrangement

A number of techniques exist for establishing various systems configuration

of resources. The key consideration in designing functional layouts (as used

in batch manufacture) is the need to reduce total distance incurred in

material movement and optimize production flow. For flow manufacturing,

the important thing is line balancing, so as to ensure that no operator is

unduly over-or-under-loaded. Other considerations are:

Throughput time and cost minimization by reducing movement,

handling and inefficiencies. Throughput time is the time to complete

the processing.

Supervision and control simplified by better layouts

Enables flexibility

Maximizes output

Attention to human and organizational issues

Quality of product or service maintained.

5.2.1 Facility layout objectives

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The overall objective of a facility layout is to develop an arrangement of

processes and related equipment, work areas, systems, storage areas and

people needed to provide a service or make a product so that these

resources can operate at peak efficiency and effectiveness. This can be

segmented into the following three objectives.

5.2.2 Minimize cost of movement - Most operations have physical flow of

material, equipment or people. The extent and cost of these flows will be

affected by the way the resources in the facility are configured. In

manufacturing plants, the movement of raw materials, semi-processed

products, finished products and people, depends on where the required

resources are positioned. The movement of customers in a retail store, hotel

or restaurant will be influenced by the layout of the facility. A good layout

will reduce distance moved by material, products or people and time

consumed. This results in a cost saving by the organization.

5.2.3 Eliminate congestion and delay The objective of most operations

is to add to the value of inputs. This is achieved by processing or

transforming inputs into finished products. When material is delayed or

stored in-between processing stages, no value is added. Therefore storage of

work-in-progress does not add value to the products. A poor layout can

cause an operation to generate a lot of work-in-progress and processing

delays. Please note: The extent of work-in-progress can also be affected by

effectiveness of scheduling and nature of operations. Time spent by

customers waiting in the system does not generate revenue. So the objectiveof avoiding congestion and delay will result in intensive use of facilities and

more efficient use of capacity.

5.2.4 Maximize utilization of space, facilities and labour The cost of

factory space, office or warehouse space is high. Wasted space can be

eliminated by a good layout. This will also reduce idle time and cut down on

investments in plant and support services. A good layout also facilitates

effective operation, maintenance, service and supervision and enables better

utilization of resources.

Basic Types of Layouts

There are three basic types of layouts in manufacturing plants fixed

position, process or functional and product or service. Each one has its own

characteristics and is appropriate to some form of manufacturing, depending

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on the output rate and range of products made. Some organizations try to

improve levels of effectiveness and efficiency of basic layouts by mixing

elements to form hybrids like Cellular and Transfer line layouts.

Figure: Types of layout used in different operations

Service delivery system LAYOUT TYPE Manufacturing process

Non repeat Fixed position ProjectProcess or functional Jobbing

BatchRepeat Low volume

High volumeProduct or service Line

Continuous processingSource T Hill, Operations Management, 2nd edn, Palgrave, p.225

Fixed position

The product remains stationary as material, labour and equipment movesaround as and when required by the product being made. This is common for

civil engineering projects and huge products which would be difficult to move

once completed, like ships or aircrafts. Historically a large proportion of

production was done using this layout, however nowadays its relatively

uncommon.

Process or Functional layout

All operations or activities of a similar nature are grouped together in the

same department or section of the plant. This is suitable for operations

where small quantities of a large product range are being manufactured e.g.

jobbing. This layout permits flexibility in production. While this is an

advantage, it can also cause problems. Process layouts normally operate

with high levels of work-in-progress and throughput time is high. The cost of

material handling is very high and scheduling operations is very complicated.

The advantages of this layout are:

similar skills are grouped together which allows for skills to beenhanced, cohesion and experience transferred

utilization of processes, skilled manpower and equipment is improved

since it can be accessed from one area.

wide range of products and services can be provided

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delivery system can handle many customer requirements at the same

time.

Examples of layout processes include the following;

many batch manufacturing plants

hospitals the functions are laid out based on functionality (operating

theatre, reception area, X-ray are, consulting rooms

printing company activities like design, plate preparation, ink

laboratory, printing and post printing tasks are done in separate areas

or departments.

supermarkets layout is based on similar merchandise (e.g. soft

drinks, bakery products)

Product or Service layout

This layout is appropriate for production of a small range of products in large

quantities. Ideally only one standardized product is involved and it is

processed continuously. Resources are arranged according to the needs of

the product and in a sequence dictated by the processing steps involved in

making that product. These layout are relatively inflexible , they require high

volumes of demand to ensure a high utilization of equipment. A mixture ofskills often occurs resulting in difficulties in payment and supervision. On the

other hand the work done is highly rationalized, so demand for specialized

skills is low. Minimum floor space is required and work-in-progress is

minimized while throughput is high. Requirements for handling materials are

relatively low and facility utilization is high.

Cellular or Group layout

This is a hybrid form which provides a type of product layout arrangement

for manufacturing of similar items. Its used a way of achieving some

benefits of product layout in batch manufacture of products. Based on the

process/ functional layout but instead of say a drilling section, there is a cell/

group that has all the products processes.

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Transfer line layout

For high volume products the hybrid process is known as a transfer line. This

is a hybrid between flow line and continuous processes. The process layout is

product oriented, with the basic flow line process enhanced by the inclusion

of automated systems, which transfers material between automatic stations.This is done to simulate continuous processes and reduce delays between

processing stations. Transfer lines are fully automated while assembly lines

(flow lines) are not. The processes occur while the product is moving e.g.

drilling occurs while the product is moving to the cutting section therefore

the product does not sit at a station for processing. Product layout Mass

production and Continuous process, Functional layout Batch and Jobbing

processes. Balancing loss A restriction due to machine configuration or

layout e.g. when product accumulates at a certain process in the flow line.

Detailed design of layouts

After selecting a basic layout, the next step is to design a detailed layout

i. Detailed design in fixed position layout

Location is determined on the basis of the movement of the

transforming resources

The objective is to achieve a layout for the operation which allows

transforming resources to maximize their contribution to the

transforming process.

ii. Detailed design in process layout

this is a very complex process

the prime objective is to minimize the costs of the operation which

is associated with the flow of transformed resources e.g. minimize

the need to transport components

Retailers or supermarkets may layout their operations to maximize

revenue.

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Average work station time, . This figure is always less than

cycle time, so

Balancing loss(%)= .

The objective of line balancing is to

minimize idle time

minimize number of work stations

distribute balancing loss evenly between stations

Methods for line balancing

Several methods have been developed for line balancing and their aim

is to get optimum solutions. These methods are heuristic and the

common ones are by Kilbridge and Wester, Arcus, Helgerson and

Birnie. (A heuristic method provides a good but not necessarily the

best solution. In reality most operations management decisions are

heuristic or more colloquially, rules of thumb)

Practice Questions

1. What are the key factors to be considered when selecting

location?

2. What are the characteristics of a good layout?

Balancing line Product layout

Effectiveness Process layout

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SECTION II: MANAGING AND CONTROLLING OPERATIONS SYSTEMS

CHAPTER 6 OPERATIONS PLANNING , SCHEDULING AND CONTROL

Learning Outcomes


Identify the activities involved in operational planning.

Know the objectives of scheduling, project planning and control.

Plan acceptable performance measure at a future date. One method of

planning assumes things are predictive due to relative stability and can use

history e.g. trend analysis. The second method assumes that you create the

future -

6.1. Operational Planning

It is concerned with the determination, acquisition and arrangement of all

facilities necessary for future operations. It is a pre-operating activity, which

determines resources required to produce goods/services and generates a

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schedule which shows how and when these products will be produced.

Typical steps are as follows:

o Estimation or measurement of demand

o

Aggregate Capacity Planning develops a medium to long termstatement of capacity requirements in aggregate terms, i.e., a

plan indicating the amount of resources required to satisfy total

expected demand, period-by-period.

o Master Operations Schedule is developed from aggregate

capacity plan. It is a breakdown of the aggregate plan showing

when major operations required for each expected item of

demand are to be undertaken. It is time-phased and identifies

major resource categories and individual orders.

o Rough-cut capacity planning involves the analysis of the MOS in

order to identify time phased capacity requirements

o Detailed Operations Schedule or Production plan has a time

horizon which is less than that of MOS

6.1.2 Scheduling

Detailed Operations Schedules can be produced by a process called Activity

scheduling. A schedule or production plan would be a series of tasks set

against a given timeframe. It is necessary to define two terms relevant to thescheduling task. Firstly, loading or production load is the immediate work

for a process and is usually regarded as having a shorter timescale(minutes

or hours) as opposed to a schedule which uses days or weeks. This term is

also used as machine loading. The second one is sequence, which is the

order in which tasks or orders are to be performed, and is often used in a

schedule. So scheduling involves deciding the sequence of tasks or orders

based on some prioritization rule or guide. Some common priority

sequencing rules are

First come, First serve

Shortest processing time, first (SPT)

Earliest Due date, first (EDD)

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There are some specific operations cases where a number of heuristic

algorithms can be used. The most commonly used one is the Johnston

algorithm, which results in minimum total processing time when loading any

number of jobs on two machines or stations. (A heuristic method provides a

good but not necessarily the best solution. In reality, most operations

management decisions are heuristic or more colloquially, rules of thumb)

Johnsons algorithm

i. Find the shortest processing time on operation 1 and 2

ii. If shortest time on 1, place that job first; if on 2, place last

iii. Apply steps 1 and 2 to remaining jobs

iv. In the event of a tie , priority goes to the shortest time on the non

tied operation

6.1.3 Project Planning or Scheduling

Any project management activity looks at the three key performance issues,

namely; cost, quality and completion time. This section helps in ensuring

that the project is completed within a planned timeframe.

It involves the detailed allocation of resources to the various activities. It

uses tools like Gantt Charts and network analysis tools like, Critical Path

Method(CPM) or Project Evaluation Review Technique(PERT). The six steps in

network analysis using CPM or PERT are:

i. Define the project and its significant activities and tasks

ii. Develop relationships among activities and decide upon their

order/precedence

iii. Draw the network diagram

iv. Assign time/cost estimates to activities

v. Compute the longest path through the network the critical path

vi. Use the network to schedule and control project activities

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6.1.4 Operations Control

Operations control is concerned with the implementation of a predetermined

operations plan or policy and the control of all aspects of operations in linewith such plan.

Practice Questions

1. What is the significance of operational planning and scheduling?

2. What is the objective of the control activity?

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CHAPTER 7: MANAGING CAPACITY

Learning Outcomes


Define Capacity.

Know how to match demand to capacity.

7.1 What is Capacity?

Capacity of an organization is a measure of the usable resources available to

the system and having the wrong capacity level affects either customer

service or resource utilization. Capacity comprises the resources to serve

customers, process information or make products and is a mixture of people,

systems, equipment and facilities needed to meet service or productrequirements.

There are several definitions of capacity which facilitate the expression of

how much and how well the operation is producing.

Capacity is the rate of output that can be achieved from a

transformation process

Design capacity is the quantity that an organization would like toproduce under circumstances for which the system is designed to

handle.

Maximum capacity is the highest output that can be achieved

Capacity utilization is the extent to which a firm uses its capacity. It is

normally measured as a percentage of designed or installed capacity

7.1.1 Matching Capacity to Demand

The major task in this area of operations is to reduce the difference between

capacity and demand. This can be done by either managing demand,

managing capacity or a combination of both.

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7.1.2 Managing Demand

Demand is inherently variable and the organization can select from a

number of alternatives, in order to better meet the needs of the business

and its customers.

a. Changing the pattern of demand

Altering price levels to differentiate peak and off-peak periods

Advertising to stimulate demand in periods of low demand

Complementary services or products. This involves using

facilities for alternative demand during off-peak periods, e.g.,

increasing the usage of hotels for conferences when demand

for accommodation is low.

b. Scheduling

Reservations and appointments. This involves pre-selling slots

and once taken, demand will be moved into future slots or

alternative systems within the same organization

Fixed service schedules are often used to enhance the effective

use of capacity. All forms of public transport use fixed schedules

to manage demand.

Educating customers to use capacity during less congested

periods and avoid inconvenience.

7.1.3 Managing Capacity

Capacity changes that require significant financial resources and are more of

a permanent nature, tend to be considered under long term plans. Here we

look at short term capacity changes.

Short term adjustments. These can be through overtime or hiring

temporary staff or increasing the number of shifts worked.

Flexible capacity involves multi-skilling staff who can then be allocated

duties based on demand. Staggering working hours can also be used

to increase capacity during certain periods of the day

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Using technology with higher processing capacity or availability, e.g.,

ATMs used by banks

Subcontracting

Practice Questions

1. What is the role of capacity management in an organization?

2. How does scheduling help manage capacity?

CHAPTER 8: MANAGING QUALITY

Learning Outcomes


Define quality.

Understand how desired quality can be achieved.

Know the contributions made by Quality gurus.

8.1 What Is Quality?

Quality can be a confusing concept, partly because different

people view quality in relation to different criteria, normally

based on their personal roles in the production-marketing chain.It is therefore important to understand the various perspectives

from which quality is viewed in order to fully appreciate the role

it plays in the many parts of a business organization. Garvin

(Evans and Lindsay, 1999) summarized five views or

perspectives to defining quality:

a. Judgmental or transcendental criteria

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Quality is synonymous with superiority or excellence

Quality is neither in the mind nor matter, but a third

identity independent of the two

Walter Shewhart defined it as the goodness of a product

In this sense quality is both absolute and universally

recognizable, a mark of uncompromising standards and

high achievement. As such, it cannot be precisely

defined you just know it when you see it.

b. Product-based criteri

Documents

Operations Module Final Document in Class[1]