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Chapter 7 - Operations Management _ Process Strategy

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PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-1 Operations Operations Management Management Process Strategy Process Strategy Chapter 7 Chapter 7
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-2 Outline Outline  GLOBAL COMPANY PROFILE: DELL COMPUTER CO.  FOUR PROCESS STRATEGIES  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-3 Outline - Continued Outline - Continued  PROCESS ANALYSIS AND DESIGN  Flow Diagrams  Time-Function Mapping  Process Charts  Service Blueprinting  SERVICE PROCESS DESIGN  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  SELECTION OF EQUIPMENT AND TECHNOLOGY
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-4 Outline - Continued Outline - Continued  PRODUCTION TECHNOLOGY  Machine Technology  Process Control  Vision Systems  Automated Storage and Retrieval System  Automated Guided Vehicle (AGV)  Flexible Manufacturing Systems (FMS)  Computer-Integrated Manufacturing (CIM)
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-5 Outline - Continued Outline - Continued  TECHNOLOGY IN SERVICES  ENVIRONMENTALLY FRIENDLY PROCESSES  PROCESS REENGINEERING
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-6 Learning Objectives Learning Objectives When you complete this chapter, you should be able to : Identify or Define:  Process focus  Repetitive focus  Product focus  Process reengineering  Service process issues  Environmental issues
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-7 Learning Objectives - Continued Learning Objectives - Continued When you complete this chapter, you should be able to: Describe or Explain:  Process analysis  Service design  Green manufacturing  Production technology
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-8 Dell Computer Company Dell Computer Company “How can we make the process of buying a computer better?”  Sell custom-build PCs directly to consumer  Integrate the Web into every aspect of its business  Operate with six days inventory  Build computers rapidly, at low cost, and only when ordered  Focus research on software designed to make installation and configuration of its PCs fast and simple
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-9 Fit of Process, Volume, and Variety Fit of Process, Volume, and Variety Process focus projects, job shops, (machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-10 Production Process Flow Diagram Production Process Flow Diagram Shipping Customer Customer sales representative (take order) Prepress Department (Prepare printing plates & negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-11 Process Strategies Process Strategies  Involve determining how to produce a product or provide a service  Objective  Meet or exceed customer requirements  Meet cost & managerial goals  Has long-run effects  Product & volume flexibility  Costs & quality
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-12 Types of Process Strategies Types of Process Strategies Continuum Continuum  Process strategies that follow a continuum  Within a given facility, several strategies may be used  These strategies are often classified as: Repetitive- Focused Product-Focused Process-Focused
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-13 Process-Focused Strategy Process-Focused Strategy  Facilities are organized by process  Similar processes are together  Example: All drill presses are together  Low volume, high variety products  ‘Jumbled’ flow Operation Product A Product B 1 1 2 2 3 3  Other names  Intermittent process  Job shop
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-14 Process Focus Process Focus
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-15 Process-Focused Strategy Examples Process-Focused Strategy Examples Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-16 Process Focused Strategy - Process Focused Strategy - Pros & Cons Pros & Cons  Advantages  Greater product flexibility  More general purpose equipment  Lower initial capital investment  Disadvantages  High variable costs  More highly trained personnel  More difficult production planning & control  Low equipment utilization (5% to 25%)
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-17 Repetitive Focused Strategy Repetitive Focused Strategy  Facilities often organized by assembly lines  Characterized by modules  Parts & assemblies made previously  Modules combined for many output options  Other names  Assembly line  Production line
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-18 Repetitive Focus Repetitive Focus
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-19 Repetitive Focused Strategy - Repetitive Focused Strategy - Considerations Considerations  More structured than process-focused, less structured than product focused  Enables quasi-customization  Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-20 Repetitive-Focused Strategy - Repetitive-Focused Strategy - Examples Examples Truck © 1995 Corel Corp. Clothes Dryer © 1995 Corel Corp. Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-21 Flow Diagram Showing the Production Flow Diagram Showing the Production Process for Harley Davidson, York, PA. Process for Harley Davidson, York, PA.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-22 Product-Focused Strategy Product-Focused Strategy  Facilities are organized by product  High volume, low variety products  Where found  Discrete unit manufacturing  Continuous process manufacturing Operation Products A & B 1 2 3  Other names  Line flow production  Continuous production
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-23 Product Focus Product Focus
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-24 Product-Focused Strategy Product-Focused Strategy Pros & Cons Pros & Cons  Advantages  Lower variable cost per unit  Lower but more specialized labor skills  Easier production planning and control  Higher equipment utilization (70% to 90%)  Disadvantages  Lower product flexibility  More specialized equipment  Usually higher capital investment
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-25 Product-Focused Examples Product-Focused Examples © 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) © 1984-1994 T/Maker Co. © 1995 Corel Corp. Soft Drinks (Continuous, then Discrete) Mass Flu Shots (Discrete) © 1995 Corel Corp.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-26 Flow Diagram Showing the Flow Diagram Showing the Steelmaking Process at NUCOR Steelmaking Process at NUCOR
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-27
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-28 A Comparison (1) A Comparison (1) Process Focus (Low volume, High variety) Repetitive Focus (Modular) Product focus (High-volume, low-variety) Mass Customization (High-volume, high-variety 1. Small quantity, large variety of products Long runs, standardized product, from modules Large quantity, small variety of products Large quantity, large variety of products 2. General purpose equipment Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-29 A Comparison (2) A Comparison (2) Process Focus Repetitive Focus Product focus Mass Customization 3 Broadly skilled operators Modestly trained employees Operators less broadly skilled Flexible operators trained for customization 4 Many instructions because of change in jobs Reduced training and number of job instructions Few work orders and job instructions Custom orders require many instructions 5 Raw material high relative to product value JIT techniques used Raw material low relative to product value Raw material low relative to product value
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-30 A Comparison (3) A Comparison (3) Process Focus Repetitive Focus Product focus Mass Customization 6 WIP high relative to output JIT techniques used WIP low relative to output WIP driven down by JIT, kanban, lean production 7 Units move slowly thru plant Movement measured in hours & days Units move swiftly thru facility Goods move swiftly thru facility 8 Finished goods made to order, not stored Finished goods made to frequent forecasts Finished goods made to forecast, then stored Finished goods made to order
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-31 A Comparison (4) A Comparison (4) Process Focus Repetitive Focus Product focus Mass Customization 9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service Scheduling based on building models from a variety of forecasts Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts Scheduling sophisticated to accommodate customization 10 Fixed costs low, variable costs high Fixed costs dependent on flexibility of facilities Fixed costs high, variable costs low Fixed costs high; variable costs must be low
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-32 A Comparison (5) A Comparison (5) Process Focus Repetitive Focus Product focus Mass Customization 11 Costing, done by job, is estimated prior to doing job but only known after doing job Costs usually known based on experience Because of high fixed costs, cost dependent on utilization of capacity High fixed costs and dynamic variable costs
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-33 Process Continuum Process Continuum Process Focused (intermittent process) Repetitive Focus (assembly line) Product Focused (continuous process) Continuum High variety, low volume Low utilization (5% - 25%) General-purpose equipment Low variety, high volume High utilization (70% - 90%) Specialized equipment Modular Flexible equipment
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-34 Volume and Variety of Products Volume and Variety of Products Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization 5%-25% 20%-75% 70%-80% Poor Strategy (High variable costs) Mass Customization
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-35 Mass Customization Mass Customization  Using technology and imagination to rapidly mass- produce products that cater to sundry unique customer desires.  Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-36 Mass Customization - More Mass Customization - More Choices Than even Choices Than even Early 21st Century Item Early 1970s Vehicle models 140 260 Vehicle styles 18 1,212 Bicycle types 8 19 Software titles 0 300,000 Web sites 0 30,727,296 Movie releases 267 458 New book titles 40,530 77,446 Houston TV channels 5 185 Breakfast cereals 160 340 Item SKUs in supermarkets 14,000 150,000 Number of Choices
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-37 Process Strategies Process Strategies Rapid throughput techniques Mass Customization Modular techniques Repetitive Focus Modular design Flexible equipment Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Effective scheduling techniques
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-38 Questions for Process Analysis Questions for Process Analysis and Design and Design  Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?  Does the process eliminate steps that do not add value?  Does the process maximize customer value as perceived by the customer?  Will the process win orders?
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-39 Crossover Charts Crossover Charts $ $ $ Fixed cost Variable cost Fixed cost – Process A Fixed cost – Process B Fixed cost – Process C 200,000 300,000 400,000 $ Total process C costs T o t a l p r o c e s s A c o s t s Process A Process B Process C V1(2,857) V2 (6,666) Volume Total process B costs
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-40 Tools for Process Design Tools for Process Design  Flow Diagrams  Process Charts  Time-Function/Process Mapping  Work Flow Analysis
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-41 Production Process Flow Diagram Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-42 Time Function Map Time Function Map (Baseline) (Baseline) Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Wait Wait Move Order Order WIP WIP WIP WIP Product Product Product 12 days 1 day 1 day 1 day 1 day 13 days 4 days 10 days 9 days 52 days
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-43 Time Function Map Time Function Map (Target) (Target) 1 day 1 day 1 day 1 day 2 days Customer Sales Production control Plant Warehouse Transport Order Product Process Order Print Extrude Receive product Wait Wait Move Order Order Product Product WIP 6 days
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-44 SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description D Write order D  On desk 75 D To buyer  D Examine  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage Process Chart Example Process Chart Example
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-45 Process Chart – Hamburger Assembly Process Chart – Hamburger Assembly Dist. (Ft) Time (Mins) Chart Symbols Process Description - Meat Patty in Storage 1.5 .05 Transfer to Broiler 2.50 Broiler .05 Visual Inspection 1.0 .05 Transfer to Rack .15 Temporary Storage .5 .10 Obtain Buns, Lettuce, etc. .20 Assemble Order .5 .05 Place in Finish Rack 3.5 3.15 TOTALS Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ 2 4 1 - 2
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-46 Service Blueprint for Service at Service Blueprint for Service at Ten Minute Lube, Inc. Ten Minute Lube, Inc.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-47 Work Flow Analysis - Four Phases Work Flow Analysis - Four Phases  Request from a customer or an offer to provide services by a performer  Negotiation, allowing the customer and the performer to agree on how the work should be done and what will constitute customer satisfaction  Performance of the assignment and completion  Acceptance, closing the transaction provided the customer expresses satisfaction and agrees that the conditions were met.
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-48 Attaining Lean Production Attaining Lean Production  Focus on inventory reduction  Build systems that help employees  Reduce space requirements  Develop close relationships with suppliers  Educate suppliers  Eliminate all but value-added activities  Develop the workforce  Make jobs more challenging  Set sights on perfection!
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-49 Customer Interaction and Process Customer Interaction and Process Strategy Strategy Mass Service Professional Service Service Factory Service Shop Commercial Banking General purpose law firms Fine dining restaurants Hospitals Airlines Full-service stockbroker Retailing Personal banking Boutiques Law clinics Fast food restaurants Warehouse and catalog stores No frills airlines Limited service stockbroker For-profit hospitals Degree of Interaction and Customization Degree of Labor Intensity Low High High Low
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-50 Techniques for Improving Service Techniques for Improving Service Productivity Productivity  Separation  Self-service  Postponement  Focus  Structure service so customers must go where service is offered  Self-service so customers examine, compare and evaluate at their own pace  Customizing at delivery  Restricting the offerings Strategy Technique
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-51 Techniques for Improving Service Techniques for Improving Service Productivity - Continued Productivity - Continued  Modules  Automation  Scheduling  Training  Modular selection of service. Modular production  Separating services that lend themselves to automation  Precise personnel scheduling  Clarifying the service options  Explaining problems  Improving employee flexibility
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-52 More Opportunities to Improve More Opportunities to Improve Service Processes Service Processes  Layout  Human Resources  Technology
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-53 Production Process & Production Process & Technology Alternatives Technology Alternatives # Different Products or Parts # Different Products or Parts CIM CIM Flexible Manufacturing System Low High High General Purpose, NC, General Purpose, NC, CNC CNC Volume of Products or Parts Volume of Products or Parts Low High High Dedicated Dedicated Automation Automation
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-54 Areas of Technology Areas of Technology  Machine technology  Automatic identification systems (AIS)  Process control  Vision system  Robot  Automated storage and retrieval systems (ASRS)  Flexible manufacturing systems (FMS)  Computer-integrated manufacturing (CIM)
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-55 Machine Technology Machine Technology  Increased precision  Increased productivity  Increased flexibility  Decreased pollution  Decreased size  Decreased power requirements
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-56 Process Control Process Control  Increased process stability  Increased process precision  Real-time provision of information for process evaluation  Multi-mode information presentation
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-57 Automatic Identification Systems (AIS) Automatic Identification Systems (AIS)  Improved data acquisition  Increased scope of process automation
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-58 Vision Systems Vision Systems  Particular aid to inspection  Consistently accurate  Never bored  Modest cost  Superior to individuals performing the same tasks
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-59 Robots Robots  Perform monotonous, or dangerous tasks, or those requiring significant strength or endurance  Enhanced consistency, accuracy, speed strength, power when substituted for human effort
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-60 Automated Storage and Retrieval Automated Storage and Retrieval Systems (ASRS) Systems (ASRS)  Automated placement and withdrawal of parts and products  Particularly useful in inventory and test areas of manufacturing firms
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-61 Automated Guided Vehicle (AGV) Automated Guided Vehicle (AGV)  Electronically controlled movement of products and/or individuals
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-62 Flexible Manufacturing Systems Flexible Manufacturing Systems (FMS) (FMS)  Computer controls both the workstation and the material handling equipment  Computer control enhance flexibility  Can economically produce low volume at high quality  Reduced costs of changeover and low utilization  Stringent communication requirement between components within it
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-63 Computer Integrated Manufacturing Computer Integrated Manufacturing (CIM) (CIM)  Extension of flexible manufacturing systems  Backwards to engineering and inventory control  Forward into warehousing and shipping  Can also include financial and customer service areas  Reducing the distinction between low-volume/high-variety, and high-volume/low- variety production  Heavy reliance on information technology
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-64 Computer Integrated Manufacturing Computer Integrated Manufacturing
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-65 Technology in Services Technology in Services Service Industry Example Financial services Debit cards, electronic funds transfer, ATMs, Internet stock trading Education Electronic bulletin boards, on-line journals Utilities and government Automated one-man garbage trucks, optical mail sorters, scanners, flood warning systems Restaurants and foods Wireless orders from waiters to kitchen, robot butchering, transponders on cars to track drive-thrus Communication Electronic publishing, interactive TV Hotels Electronic check-in/check-out, electronic key/lock systems Wholesale/retail trade Point-of-sale terminals, e-commerce, electronic communication between store and supplier, bar coded data
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-66 Technology in Services - Continued Technology in Services - Continued Service Industry Example Transportation Automatic toll booths, satellite-directed navigation systems, route planning, progress monitoring Health care On-line patient monitoring, on-line medical information systems, robotic surgery, expert system diagnosis assistance Airlines Ticketless travel, scheduling, Internet ticket sales, improved navigation and route planning
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-67 Process Reengineering Process Reengineering  The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance  Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions  Requires reexamination of the basic process and its objectives  Focuses on activities that cross boundaries
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-68 Showing Sensitivity to the Showing Sensitivity to the Environment Environment  Make products recyclable  Use recycled materials  Use less harmful ingredients  Use light components  Use less energy  Use less materials
PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-69 Factors Affecting Process Factors Affecting Process Alternatives Alternatives  Production flexibility  Product volume  Product variety  Technology  Cost  Human resources  Quality  Reliability These factors These factors reduce the number reduce the number of alternatives! of alternatives! © 1984-1994 T/Maker Co.

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Chapter 7 - Operations Management _ Process Strategy

  • 1. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-1 Operations Operations Management Management Process Strategy Process Strategy Chapter 7 Chapter 7
  • 2. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-2 Outline Outline  GLOBAL COMPANY PROFILE: DELL COMPUTER CO.  FOUR PROCESS STRATEGIES  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices
  • 3. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-3 Outline - Continued Outline - Continued  PROCESS ANALYSIS AND DESIGN  Flow Diagrams  Time-Function Mapping  Process Charts  Service Blueprinting  SERVICE PROCESS DESIGN  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  SELECTION OF EQUIPMENT AND TECHNOLOGY
  • 4. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-4 Outline - Continued Outline - Continued  PRODUCTION TECHNOLOGY  Machine Technology  Process Control  Vision Systems  Automated Storage and Retrieval System  Automated Guided Vehicle (AGV)  Flexible Manufacturing Systems (FMS)  Computer-Integrated Manufacturing (CIM)
  • 5. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-5 Outline - Continued Outline - Continued  TECHNOLOGY IN SERVICES  ENVIRONMENTALLY FRIENDLY PROCESSES  PROCESS REENGINEERING
  • 6. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-6 Learning Objectives Learning Objectives When you complete this chapter, you should be able to : Identify or Define:  Process focus  Repetitive focus  Product focus  Process reengineering  Service process issues  Environmental issues
  • 7. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-7 Learning Objectives - Continued Learning Objectives - Continued When you complete this chapter, you should be able to: Describe or Explain:  Process analysis  Service design  Green manufacturing  Production technology
  • 8. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-8 Dell Computer Company Dell Computer Company “How can we make the process of buying a computer better?”  Sell custom-build PCs directly to consumer  Integrate the Web into every aspect of its business  Operate with six days inventory  Build computers rapidly, at low cost, and only when ordered  Focus research on software designed to make installation and configuration of its PCs fast and simple
  • 9. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-9 Fit of Process, Volume, and Variety Fit of Process, Volume, and Variety Process focus projects, job shops, (machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)
  • 10. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-10 Production Process Flow Diagram Production Process Flow Diagram Shipping Customer Customer sales representative (take order) Prepress Department (Prepare printing plates & negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
  • 11. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-11 Process Strategies Process Strategies  Involve determining how to produce a product or provide a service  Objective  Meet or exceed customer requirements  Meet cost & managerial goals  Has long-run effects  Product & volume flexibility  Costs & quality
  • 12. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-12 Types of Process Strategies Types of Process Strategies Continuum Continuum  Process strategies that follow a continuum  Within a given facility, several strategies may be used  These strategies are often classified as: Repetitive- Focused Product-Focused Process-Focused
  • 13. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-13 Process-Focused Strategy Process-Focused Strategy  Facilities are organized by process  Similar processes are together  Example: All drill presses are together  Low volume, high variety products  ‘Jumbled’ flow Operation Product A Product B 1 1 2 2 3 3  Other names  Intermittent process  Job shop
  • 14. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-14 Process Focus Process Focus
  • 15. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-15 Process-Focused Strategy Examples Process-Focused Strategy Examples Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.
  • 16. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-16 Process Focused Strategy - Process Focused Strategy - Pros & Cons Pros & Cons  Advantages  Greater product flexibility  More general purpose equipment  Lower initial capital investment  Disadvantages  High variable costs  More highly trained personnel  More difficult production planning & control  Low equipment utilization (5% to 25%)
  • 17. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-17 Repetitive Focused Strategy Repetitive Focused Strategy  Facilities often organized by assembly lines  Characterized by modules  Parts & assemblies made previously  Modules combined for many output options  Other names  Assembly line  Production line
  • 18. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-18 Repetitive Focus Repetitive Focus
  • 19. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-19 Repetitive Focused Strategy - Repetitive Focused Strategy - Considerations Considerations  More structured than process-focused, less structured than product focused  Enables quasi-customization  Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model
  • 20. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-20 Repetitive-Focused Strategy - Repetitive-Focused Strategy - Examples Examples Truck © 1995 Corel Corp. Clothes Dryer © 1995 Corel Corp. Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co.
  • 21. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-21 Flow Diagram Showing the Production Flow Diagram Showing the Production Process for Harley Davidson, York, PA. Process for Harley Davidson, York, PA.
  • 22. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-22 Product-Focused Strategy Product-Focused Strategy  Facilities are organized by product  High volume, low variety products  Where found  Discrete unit manufacturing  Continuous process manufacturing Operation Products A & B 1 2 3  Other names  Line flow production  Continuous production
  • 23. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-23 Product Focus Product Focus
  • 24. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-24 Product-Focused Strategy Product-Focused Strategy Pros & Cons Pros & Cons  Advantages  Lower variable cost per unit  Lower but more specialized labor skills  Easier production planning and control  Higher equipment utilization (70% to 90%)  Disadvantages  Lower product flexibility  More specialized equipment  Usually higher capital investment
  • 25. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-25 Product-Focused Examples Product-Focused Examples © 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) © 1984-1994 T/Maker Co. © 1995 Corel Corp. Soft Drinks (Continuous, then Discrete) Mass Flu Shots (Discrete) © 1995 Corel Corp.
  • 26. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-26 Flow Diagram Showing the Flow Diagram Showing the Steelmaking Process at NUCOR Steelmaking Process at NUCOR
  • 27. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-27
  • 28. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-28 A Comparison (1) A Comparison (1) Process Focus (Low volume, High variety) Repetitive Focus (Modular) Product focus (High-volume, low-variety) Mass Customization (High-volume, high-variety 1. Small quantity, large variety of products Long runs, standardized product, from modules Large quantity, small variety of products Large quantity, large variety of products 2. General purpose equipment Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment
  • 29. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-29 A Comparison (2) A Comparison (2) Process Focus Repetitive Focus Product focus Mass Customization 3 Broadly skilled operators Modestly trained employees Operators less broadly skilled Flexible operators trained for customization 4 Many instructions because of change in jobs Reduced training and number of job instructions Few work orders and job instructions Custom orders require many instructions 5 Raw material high relative to product value JIT techniques used Raw material low relative to product value Raw material low relative to product value
  • 30. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-30 A Comparison (3) A Comparison (3) Process Focus Repetitive Focus Product focus Mass Customization 6 WIP high relative to output JIT techniques used WIP low relative to output WIP driven down by JIT, kanban, lean production 7 Units move slowly thru plant Movement measured in hours & days Units move swiftly thru facility Goods move swiftly thru facility 8 Finished goods made to order, not stored Finished goods made to frequent forecasts Finished goods made to forecast, then stored Finished goods made to order
  • 31. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-31 A Comparison (4) A Comparison (4) Process Focus Repetitive Focus Product focus Mass Customization 9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service Scheduling based on building models from a variety of forecasts Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts Scheduling sophisticated to accommodate customization 10 Fixed costs low, variable costs high Fixed costs dependent on flexibility of facilities Fixed costs high, variable costs low Fixed costs high; variable costs must be low
  • 32. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-32 A Comparison (5) A Comparison (5) Process Focus Repetitive Focus Product focus Mass Customization 11 Costing, done by job, is estimated prior to doing job but only known after doing job Costs usually known based on experience Because of high fixed costs, cost dependent on utilization of capacity High fixed costs and dynamic variable costs
  • 33. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-33 Process Continuum Process Continuum Process Focused (intermittent process) Repetitive Focus (assembly line) Product Focused (continuous process) Continuum High variety, low volume Low utilization (5% - 25%) General-purpose equipment Low variety, high volume High utilization (70% - 90%) Specialized equipment Modular Flexible equipment
  • 34. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-34 Volume and Variety of Products Volume and Variety of Products Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization 5%-25% 20%-75% 70%-80% Poor Strategy (High variable costs) Mass Customization
  • 35. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-35 Mass Customization Mass Customization  Using technology and imagination to rapidly mass- produce products that cater to sundry unique customer desires.  Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.
  • 36. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-36 Mass Customization - More Mass Customization - More Choices Than even Choices Than even Early 21st Century Item Early 1970s Vehicle models 140 260 Vehicle styles 18 1,212 Bicycle types 8 19 Software titles 0 300,000 Web sites 0 30,727,296 Movie releases 267 458 New book titles 40,530 77,446 Houston TV channels 5 185 Breakfast cereals 160 340 Item SKUs in supermarkets 14,000 150,000 Number of Choices
  • 37. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-37 Process Strategies Process Strategies Rapid throughput techniques Mass Customization Modular techniques Repetitive Focus Modular design Flexible equipment Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Effective scheduling techniques
  • 38. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-38 Questions for Process Analysis Questions for Process Analysis and Design and Design  Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?  Does the process eliminate steps that do not add value?  Does the process maximize customer value as perceived by the customer?  Will the process win orders?
  • 39. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-39 Crossover Charts Crossover Charts $ $ $ Fixed cost Variable cost Fixed cost – Process A Fixed cost – Process B Fixed cost – Process C 200,000 300,000 400,000 $ Total process C costs T o t a l p r o c e s s A c o s t s Process A Process B Process C V1(2,857) V2 (6,666) Volume Total process B costs
  • 40. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-40 Tools for Process Design Tools for Process Design  Flow Diagrams  Process Charts  Time-Function/Process Mapping  Work Flow Analysis
  • 41. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-41 Production Process Flow Diagram Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
  • 42. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-42 Time Function Map Time Function Map (Baseline) (Baseline) Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Wait Wait Move Order Order WIP WIP WIP WIP Product Product Product 12 days 1 day 1 day 1 day 1 day 13 days 4 days 10 days 9 days 52 days
  • 43. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-43 Time Function Map Time Function Map (Target) (Target) 1 day 1 day 1 day 1 day 2 days Customer Sales Production control Plant Warehouse Transport Order Product Process Order Print Extrude Receive product Wait Wait Move Order Order Product Product WIP 6 days
  • 44. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-44 SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description D Write order D  On desk 75 D To buyer  D Examine  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage Process Chart Example Process Chart Example
  • 45. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-45 Process Chart – Hamburger Assembly Process Chart – Hamburger Assembly Dist. (Ft) Time (Mins) Chart Symbols Process Description - Meat Patty in Storage 1.5 .05 Transfer to Broiler 2.50 Broiler .05 Visual Inspection 1.0 .05 Transfer to Rack .15 Temporary Storage .5 .10 Obtain Buns, Lettuce, etc. .20 Assemble Order .5 .05 Place in Finish Rack 3.5 3.15 TOTALS Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ Ⅾ 2 4 1 - 2
  • 46. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-46 Service Blueprint for Service at Service Blueprint for Service at Ten Minute Lube, Inc. Ten Minute Lube, Inc.
  • 47. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-47 Work Flow Analysis - Four Phases Work Flow Analysis - Four Phases  Request from a customer or an offer to provide services by a performer  Negotiation, allowing the customer and the performer to agree on how the work should be done and what will constitute customer satisfaction  Performance of the assignment and completion  Acceptance, closing the transaction provided the customer expresses satisfaction and agrees that the conditions were met.
  • 48. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-48 Attaining Lean Production Attaining Lean Production  Focus on inventory reduction  Build systems that help employees  Reduce space requirements  Develop close relationships with suppliers  Educate suppliers  Eliminate all but value-added activities  Develop the workforce  Make jobs more challenging  Set sights on perfection!
  • 49. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-49 Customer Interaction and Process Customer Interaction and Process Strategy Strategy Mass Service Professional Service Service Factory Service Shop Commercial Banking General purpose law firms Fine dining restaurants Hospitals Airlines Full-service stockbroker Retailing Personal banking Boutiques Law clinics Fast food restaurants Warehouse and catalog stores No frills airlines Limited service stockbroker For-profit hospitals Degree of Interaction and Customization Degree of Labor Intensity Low High High Low
  • 50. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-50 Techniques for Improving Service Techniques for Improving Service Productivity Productivity  Separation  Self-service  Postponement  Focus  Structure service so customers must go where service is offered  Self-service so customers examine, compare and evaluate at their own pace  Customizing at delivery  Restricting the offerings Strategy Technique
  • 51. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-51 Techniques for Improving Service Techniques for Improving Service Productivity - Continued Productivity - Continued  Modules  Automation  Scheduling  Training  Modular selection of service. Modular production  Separating services that lend themselves to automation  Precise personnel scheduling  Clarifying the service options  Explaining problems  Improving employee flexibility
  • 52. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-52 More Opportunities to Improve More Opportunities to Improve Service Processes Service Processes  Layout  Human Resources  Technology
  • 53. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-53 Production Process & Production Process & Technology Alternatives Technology Alternatives # Different Products or Parts # Different Products or Parts CIM CIM Flexible Manufacturing System Low High High General Purpose, NC, General Purpose, NC, CNC CNC Volume of Products or Parts Volume of Products or Parts Low High High Dedicated Dedicated Automation Automation
  • 54. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-54 Areas of Technology Areas of Technology  Machine technology  Automatic identification systems (AIS)  Process control  Vision system  Robot  Automated storage and retrieval systems (ASRS)  Flexible manufacturing systems (FMS)  Computer-integrated manufacturing (CIM)
  • 55. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-55 Machine Technology Machine Technology  Increased precision  Increased productivity  Increased flexibility  Decreased pollution  Decreased size  Decreased power requirements
  • 56. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-56 Process Control Process Control  Increased process stability  Increased process precision  Real-time provision of information for process evaluation  Multi-mode information presentation
  • 57. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-57 Automatic Identification Systems (AIS) Automatic Identification Systems (AIS)  Improved data acquisition  Increased scope of process automation
  • 58. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-58 Vision Systems Vision Systems  Particular aid to inspection  Consistently accurate  Never bored  Modest cost  Superior to individuals performing the same tasks
  • 59. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-59 Robots Robots  Perform monotonous, or dangerous tasks, or those requiring significant strength or endurance  Enhanced consistency, accuracy, speed strength, power when substituted for human effort
  • 60. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-60 Automated Storage and Retrieval Automated Storage and Retrieval Systems (ASRS) Systems (ASRS)  Automated placement and withdrawal of parts and products  Particularly useful in inventory and test areas of manufacturing firms
  • 61. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-61 Automated Guided Vehicle (AGV) Automated Guided Vehicle (AGV)  Electronically controlled movement of products and/or individuals
  • 62. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-62 Flexible Manufacturing Systems Flexible Manufacturing Systems (FMS) (FMS)  Computer controls both the workstation and the material handling equipment  Computer control enhance flexibility  Can economically produce low volume at high quality  Reduced costs of changeover and low utilization  Stringent communication requirement between components within it
  • 63. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-63 Computer Integrated Manufacturing Computer Integrated Manufacturing (CIM) (CIM)  Extension of flexible manufacturing systems  Backwards to engineering and inventory control  Forward into warehousing and shipping  Can also include financial and customer service areas  Reducing the distinction between low-volume/high-variety, and high-volume/low- variety production  Heavy reliance on information technology
  • 64. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-64 Computer Integrated Manufacturing Computer Integrated Manufacturing
  • 65. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-65 Technology in Services Technology in Services Service Industry Example Financial services Debit cards, electronic funds transfer, ATMs, Internet stock trading Education Electronic bulletin boards, on-line journals Utilities and government Automated one-man garbage trucks, optical mail sorters, scanners, flood warning systems Restaurants and foods Wireless orders from waiters to kitchen, robot butchering, transponders on cars to track drive-thrus Communication Electronic publishing, interactive TV Hotels Electronic check-in/check-out, electronic key/lock systems Wholesale/retail trade Point-of-sale terminals, e-commerce, electronic communication between store and supplier, bar coded data
  • 66. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-66 Technology in Services - Continued Technology in Services - Continued Service Industry Example Transportation Automatic toll booths, satellite-directed navigation systems, route planning, progress monitoring Health care On-line patient monitoring, on-line medical information systems, robotic surgery, expert system diagnosis assistance Airlines Ticketless travel, scheduling, Internet ticket sales, improved navigation and route planning
  • 67. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-67 Process Reengineering Process Reengineering  The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance  Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions  Requires reexamination of the basic process and its objectives  Focuses on activities that cross boundaries
  • 68. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-68 Showing Sensitivity to the Showing Sensitivity to the Environment Environment  Make products recyclable  Use recycled materials  Use less harmful ingredients  Use light components  Use less energy  Use less materials
  • 69. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-69 Factors Affecting Process Factors Affecting Process Alternatives Alternatives  Production flexibility  Product volume  Product variety  Technology  Cost  Human resources  Quality  Reliability These factors These factors reduce the number reduce the number of alternatives! of alternatives! © 1984-1994 T/Maker Co.

Editor's Notes

  • #8: You might begin the discussion of Dell Computer Company by asking: Why do they operate in this fashion? What is their mission?”
  • #9: It may be most useful to begin discussion of this slide with the repetitive process since most students seem to have a concept of an assembly line. Once the repetitive process is introduced, one can then view changing one of the parameters, volume or length of run, and argue the need for process- or product-focus systems. Once the three types of processes have been introduced, it is probably useful to discuss precisely why the low-volume/long run, and high-volume/short run options are usually poor choices.
  • #10: The most important point illustrated by this slide is that process design entails both material flow and information flow.
  • #11: This slide can be used to introduce the concept of trade-off in process design.
  • #12: This slide can be used to begin discussion of two points: - one seldom employs a pure process strategy (process, repetitive, or product) - but rather a strategy which has elements of each of the pure strategies - i.e., practical strategies lie along a continuum. - one seldom employs only a single strategy.
  • #13: You can use this slide to introduce a discussion of process-focused strategy. Examples are suggested in the following slide or may be requested of students.
  • #14: It is probably most useful to introduce process focused production systems by example.
  • #16: Select one of the examples you have presented of process-focused strategy, and ask students to identify the sources of advantage and disadvantage.
  • #17: You can use this slide to begin your discussion of repetitive strategies; the next suggests additional characteristics; the slide following that, some examples.
  • #20: At this point, you might compare in more detail, McDonalds (which uses a batch system) with Wendy’s (which, at least at high volumes, perhaps more closely resembles a simple assembly line).
  • #22: You can use this slide to begin a discussion of product-focused strategy. The following slide outlines some advantages/disadvantages of this approach.
  • #23: As before, it is probably most useful to introduce product focused production systems by example.
  • #25: Some examples of products produced using a product-focused strategy.
  • #33: Another slide which may be used to summarize differences between the process strategies.
  • #34: This slide resembles a slide used earlier, but adds more detail. You may wish to use this slide in review or summary, or, simply skip it and move on.
  • #35: Once students understand what mass customization is, they should be asked to consider whether such an approach will move from an “option” at present, to a “necessity” in the future.
  • #38: You might use this slide to frame a discussion on process evaluation. Once you have discussed the questions posed on the slide, you might ask students to suggest additional questions or “tests” by which one might evaluate the “quality” of a process.
  • #40: This slide introduces tools for process design. While examples of flow diagrams and process charts have arisen earlier in the presentation, they are repeated in the next two slides.
  • #41: The most important point illustrated by this slide is that process design entails both material flow and information flow.
  • #42: It is probably useful to walk students through both the content and structure of this diagram.
  • #43: It is probably useful to walk students through both the content and structure of this diagram.
  • #44: You can use this slide as an example of a process chart, use it to guide students in developing their own charts for some common activity.
  • #47: This slide can be used to frame a discussion of Work Flow Analysis.
  • #48: This slide can be used to frame a discussion of lean production. It should also be used to stress that process design is all encompassing - not simply an issue for those workers in the “production” department.
  • #49: This slide can be used to introduce the design of service processes, or to frame a discussion of the impact of customer interaction on the design of process in general. Here it is probably useful to ask that students define the nature of the customer interaction represented in each quadrant, and identify ways in which the process must be modified in light of these interactions.
  • #50: Students should be asked to suggest examples of companies/products employing the techniques listed on this and the next two slides.
  • #52: Ask students to suggest at least one example of the use of each of these approaches.
  • #53: We have looked previously at the three types of process. This slide introduces the differences in technology appropriate to the different process strategies.
  • #67: This slide merits discussion. While Process Reengineering has the potential to significantly improve both efficiency and effectiveness of an organization’s processes, its actual implementation often results in failure. Some of the points to be made: - process reengineering, if successful, will result in significant change in process, responsibilities, patterns of communication, and other organization staples. - process reengineering cannot be implemented top down - the workers actually performing the process should be the ones to redesign it. - process reengineering requires that fundamental questions (e.g., “Why are we doing this?” and “Why are we doing this this way?”) must be asked and answered.
  • #68: While this slide may be used simply as a reminder that one can design a process while remaining sensitive to the environment - it should be given additional emphasis. Students should be asked to identify companies or products that emphasize environmentally sound practices, and discuss how these practices impact their process design strategies.
  • #69: These factors should be explored either through examples which you present or which are suggested by the students. Again, if all else fails, discussion of the processes employed at your college or university should provide good examples.