Process Design

7
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition

PowerPoint slides by Jeff Heyl

© 2014
© 2014
Pearson
Pearson
Education
Education 7-1
 OUTLINE
▶ Four Process Strategies
▶ Using Crossover Charts for Process
Selection
▶ Tools for Process Analysis and
Design
▶ Key Issues in Service Process Design
▶ Technologies to Improve Production
and Productivity
© 2014 Pearson Education 7-2
 Process Strategy

The objective is to create a

process to produce products
that meets customer
requirements within cost and
other managerial constraints

© 2014 Pearson Education 7-3

 Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume
High Variety
one or few units Process Focus Mass Customization
per run, projects, job shops (difficult to achieve, but
(allows (machine, print, huge rewards)
customization) hospitals, restaurants) Dell Computer
Arnold Palmer Hospital

Changes in
Modules
modest runs, Repetitive
standardized (autos, motorcycles,
modules home appliances)
Harley-Davidson
Changes in
Attributes (such
as grade, quality, Poor Strategy Product Focus
size, thickness, (Both fixed and (commercial baked goods,
etc.) variable costs steel, glass, beer)
long runs only are high) Frito-Lay
© 2014 Pearson Education 7-4
 Process Strategies
Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization

Within these basic strategies there are

many ways they may be implemented
© 2014 Pearson Education 7-5
 Manufacturing Process
Layout
Milling
Lathe Department Department Drilling Department
M M D D D D
L L

M M D D D D
L L

G G G P
L L

G G G P
L L
Grinding Painting Department
Department
L L
Receiving and A A A
Shipping Assembly

© 2014 Pearson Education 7-6

 Many inputs
Process Focus (surgeries, sick patients,
baby deliveries, emergencies)

(low-volume, high-variety,
Many departments and
intermittent processes) many routings
Arnold Palmer Hospital

Figure 7.2(a) Many different outputs

(uniquely treated patients)
© 2014 Pearson Education 7-7
 Process Focus
► Facilities are organized around specific
activities or processes
► General purpose equipment and skilled
personnel
► High degree of product flexibility
► Typically high costs and low equipment
utilization
► Product flows may vary considerably
making planning and scheduling a
challenge
© 2014 Pearson Education 7-8
 Repetitive Focus
► Facilities often organized as assembly
lines
► Characterized by modules with parts and
assemblies made previously
► Modules may be combined for many
output options
► Less flexibility than process-focused
facilities but more efficient

© 2014 Pearson Education 7-9

 Raw materials and
Repetitive module inputs
(multiple engine models,

Focus wheel modules)

Few
modules

(modular)
Harley Davidson

Figure 7.2(b) Modules combined for many

Output options
© 2014 Pearson Education
(many combinations of motorcycles)
7 - 10
 Repetitive Focus

Raw materials
or customer Station Station Station Station Finished
1 2 3 4 item

Material Material Material Material

and/or and/or and/or and/or
labor labor labor labor

Repetitive Manufacturing

© 2014 Pearson Education 7 - 11

 Few Inputs
Product Focus (corn, potatoes, water,
seasoning)

(high-volume, low-variety,
continuous process)
Frito-Lay

Output variations in size,

Figure 7.2(c) shape, and packaging
(3-oz, 5-oz, 24-oz package
labeled for each material)
© 2014 Pearson Education 7 - 12
 Product Focus
D A Scrap
Nucor Steel Plant steel
Continuous caster

B
C Electric
Ladle of molten steel furnace

Continuous cast steel

sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
E F

Hot mill for finishing, cooling, and coiling

H G
I

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 7 - 13

Prentice Hall
 Product Focus
► Facilities are organized by product
► High volume but low variety of
products
► Long, continuous production runs
enable efficient processes
► Typically high fixed cost but low
variable cost
► Generally less skilled labor
© 2014 Pearson Education 7 - 14
 Mass Customization
► The rapid, low-cost production of
goods and service to satisfy
increasingly unique customer desires
► Combines the
flexibility of a
process focus
with the efficiency
of a product focus

© 2014 Pearson Education 7 - 15

 Mass Many parts and
component inputs
(chips, hard drives, software,
Customization cases)

Many modules
(high-volume, high-variety)
Dell Computer

Figure 7.2(d)
Many output versions
(custom PCs and notebooks)
© 2014 Pearson Education 7 - 16
 Mass Customization
TABLE 7.1 Mass Customization Provides More Choices Than Ever
NUMBER OF CHOICES
ITEM 1970s 21ST CENTURY
Vehicle styles 18 1,212
Bicycle types 8 211,000
Software titles 0 400,000
Web sites 0 255,000,000
Movie releases per year 267 744
New book titles 40,530 300,000
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in supermarkets 14,000 150,000
LCD TVs 0 102

© 2014 Pearson Education 7 - 17

 Comparison of Processes
TABLE 7.2 Comparison of the Characteristics of Four Types of Processes

PRODUCT MASS
PROCESS FOCUS REPETITIVE FOCUS CUSTOMIZATION
(LOW-VOLUME, FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
HIGH-VARIETY) (MODULAR) LOW-VARIETY) HIGH-VARIETY)

1. Small quantity 1. Long runs, 1. Large 1. Large quantity

and large usually a quantity and and large
variety of standardized small variety variety of
products product from of products products
modules

2. Broadly 2. Moderately 2. Less broadly 2. Flexible

skilled trained skilled operators
operators employees operators

© 2014 Pearson Education 7 - 18

 Comparison of Processes
TABLE 7.2 Comparison of the Characteristics of Four Types of Processes

PRODUCT MASS
PROCESS FOCUS REPETITIVE FOCUS CUSTOMIZATION
(LOW-VOLUME, FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
HIGH-VARIETY) (MODULAR) LOW-VARIETY) HIGH-VARIETY)

3. Instructions 3. Few changes 3. Standardized 3. Custom orders

for each job in the job requiring many
instructions instructions job instructions

4. High 4. Low inventory 4. Low 4. Low inventory

inventory inventory relative to the
value of the
product

© 2014 Pearson Education 7 - 19

 Comparison of Processes
TABLE 7.2 Comparison of the Characteristics of Four Types of Processes

PRODUCT MASS
PROCESS FOCUS REPETITIVE FOCUS CUSTOMIZATION
(LOW-VOLUME, FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
HIGH-VARIETY) (MODULAR) LOW-VARIETY) HIGH-VARIETY)

5. Finished 5. Finished 5. Finished 5. Finished goods

goods are goods are goods are are build-to-
made to order made to made to a order (BTO)
and not frequent forecast and
stored forecasts stored

6. Scheduling is 6. Scheduling is 6. Scheduling is 6. Sophisticated

complex routine routine scheduling
accommodates
custom orders

© 2014 Pearson Education 7 - 20

 Comparison of Processes
TABLE 7.2 Comparison of the Characteristics of Four Types of Processes

PRODUCT MASS
PROCESS FOCUS REPETITIVE FOCUS CUSTOMIZATION
(LOW-VOLUME, FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
HIGH-VARIETY) (MODULAR) LOW-VARIETY) HIGH-VARIETY)

7. Fixed costs 7. Fixed costs 7. Fixed costs 7. Fixed costs

are low and are dependent are high and tend to be high
variable costs on flexibility of variable costs and variable
high the facility low costs low

© 2014 Pearson Education 7 - 21

 Crossover Chart Example
▶ Evaluate three different accounting software
products
▶ Calculate crossover points between software A
and B and between software B and C

DOLLARS REQUIRED PER

TOTAL FIXED COST ACCOUNTING REPORT
Software A $200,000 $60
Software B $300,000 $25
Software C $400,000 $10

© 2014 Pearson Education 7 - 22

 Crossover Chart Example
( ) ( )
200,000 + 60 V1 = 300,000 + 25 V1
35V1 = 100,000
V1 = 2,857
► Software A is most economical from 0 to 2,857 reports

( ) ( )
300,000 + 25 V2 = 400,000 + 10 V2
15V2 = 100,000
V2 = 6,666
► Software B is most economical from 2,857 to
6,666 reports
© 2014 Pearson Education 7 - 23
 Crossover Charts
Variable
costs
Variable Variable
$ costs $ costs $
Fixed costs Fixed costs
Fixed costs
Low volume, high variety Repetitive High volume, low variety
Process A Process B Process C

400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
Figure 7.3
(2,857) V1 V2 (6,666) Volume
© 2014 Pearson Education 7 - 24
 Focused Processes
◆ Focus brings
Less overhead costs
Less complexity
More efficiency
Focus can be on:
▶ Customers (Hotel owners:
dishwashers)
▶ Products (Caterpillar)
▶ Service (Children hospital)
▶ Technology (SAP: software)
© 2014 Pearson Education 7 - 25
 Analyzing and Designing
Processes

◆ Design the process to achieve

a competitive advantage
◆ Analyze the process to
eliminate the steps that do not
add value

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 7 - 26

Prentice Hall
 Tools Used for Process
Analysis and Design
◆ Flow Charts - Shows the movement of materials
◆ Time-Function Mapping - Shows flows and time
frame
◆ Value-Stream Mapping - Shows flows and time
and value added beyond the immediate
organization
◆ Process Charts - Uses symbols to show key
activities
◆ Service Blueprinting - focuses on
customer/provider interaction
© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 7 - 27
Prentice Hall
 Flow Chart
Order waits
for sales rep.
Operator Orders wait Orders
takes phone to be picked wait for No
order. up. supervisor.

Is order
complete?

Orders are Supervisor

moved to inspects
supervisor’s orders. Yes
in-box.
Order is
fulfilled.

© 2014 Pearson Education 7 - 28

 “Baseline” Time-Function Map
Order Receive
Customer product product

Process
Sales order
Order

Production Wait
control

Product
Order

Plant A Print

Product
WIP

Warehouse Wait Wait Wait

Product
WIP
WIP
WIP

Plant B Extrude

Transport Move Move

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

Figure 7.4(a)
52 days
© 2014 Pearson Education 7 - 29
 “Target” Time-Function Map
Order Receive
Customer product product

Process
Sales order

Product
Order

Production
control Wait
Order

WIP
Plant Print Extrude

Product
Warehouse Wait

Product
Transport Move

1 day 2 days 1 day 1 day 1 day

6 days
Figure 7.4(b)
© 2014 Pearson Education 7 - 30
 Value-Stream Mapping

Figure 7.5

© 2014 Pearson Education 7 - 31

 Process Chart

© 2014 Pearson Education Figure

7 - 32 7.6
 Service Blueprinting
◆ Helps to identify potential failure points
in customer and service provider
interaction
◆ Defines three levels of interaction
Level 1: Activities under the control of
the customer
Level 2: Interaction between the
customer and service provider
Level 3: Activities performed invisibly to
the customer
◆ Each level has different management
© 2011 Pearson Education, Inc. publishing as
© 2014 Pearson Education 7 - 33
issues
Prentice Hall
 Service Blueprint
Poka-Yoke (level 1): Put a bell in driveway so that
customer will be noticed
Personal Greeting Service Diagnosis Perform Service Friendly Close

Level Customer arrives

for service. Customer departs
#1
(3 min)

F
Determine Notify Customer pays bill.
specifics. customer (4 min)
Warm greeting (5 min)
and obtain No and recommend
an alternative
F
service request.
(10 sec) provider.
Standard Can F
Level request. (7min)
service be
#2 (3 min) done and does Notify
Direct customer customer No customer the
to waiting room. approve? car is ready.
(5 min) (3 min)

F F F F
Yes Yes
Perform
Level required work. F Prepare invoice.
#3 (varies) (3 min)

Figure 7.8
© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 7 - 34
Prentice Hall
 Special Considerations for
Service Process Design
► Some interaction with customer is
necessary, but this often affects
performance adversely
► The better these interactions are
accommodated in the process design, the
more efficient and effective the process
► Find the right combination of cost and
customer interaction

© 2014 Pearson Education 7 - 35

 Improving Service
Productivity
TABLE 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE
Separation Structuring service so Bank customers go to a
customers must go where manager to open a new
the service is offered account, to loan officers for
loans, and to tellers for
deposits
Self-service Self-service so customers Supermarkets and
examine, compare, and department stores
evaluate at their own pace
Postponement Customizing at delivery Customizing vans at delivery
rather than at production
Focus Restricting the offerings Limited-menu restaurant

© 2014 Pearson Education 7 - 36

 Improving Service
Productivity
TABLE 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE
Modules Modular selection of Investment and insurance
service selection
Modular production Prepackaged food modules
in restaurants
Automation Separating services that Automatic teller machines
may lend themselves to
some type of automation
Scheduling Precise personnel Scheduling ticket counter
scheduling personnel at 15-minute
intervals at airlines
Training Clarifying the service Investment counselor,
options funeral directors
Explaining how to avoid After-sale maintenance
problems personnel
© 2014 Pearson Education 7 - 37
 Technologies to Improve
Production and Productivity
1. CNC Machinery
2. Automatic identification systems (AISs) Bar Codes
and RFID
3. Vision system for process control and inspection,
(video camera & computers)
4. Robots
5. Automated storage and retrieval systems (ASRSs)
6. Automated guided vehicles (AGVs)
7. Flexible manufacturing systems (FMSs)
8. Computer-integrated manufacturing (CIM)

© 2014 Pearson Education 7 - 38

 CNC Machinery

© 2014 Pearson Education © 2011 Pearson 7 - 39

 Vision Systems for Process
Control
► Real-time monitoring and control of
processes
► Sensors collect data
► Devices read data
on periodic basis
► Measurements translated into digital
signals then sent to a computer
► Computer programs analyze the data
► Resulting output may take numerous
forms
© 2014 Pearson Education 7 - 40
 Robots
► Perform monotonous or dangerous
tasks
► Perform tasks
requiring significant
strength or
endurance
► Generally enhanced
consistency and
accuracy
© 2014 Pearson Education 7 - 41
 Automated Storage and
Retrieval Systems (ASRSs)
► Automated placement and withdrawal
of parts and products
► Reduced errors and labor
► Particularly useful in inventory and test
areas of manufacturing firms

© 2014 Pearson Education 7 - 42

© 2014 Pearson Education © 2011 Pearson 7 - 43
 Automated Guided Vehicle
(AGVs)

► Electronically guided
and controlled carts
► Used for movement
of products and/or
individuals

© 2014 Pearson Education 7 - 44

© 2014 Pearson Education © 2011 Pearson 7 - 45
 Flexible Manufacturing
System

A schematic illustration of a flexible manufacturing system showing machining

centers, a measuring and inspection station. And automated guided vehicles.
Source: After J. T. Black.
© 2014 Pearson Education Manufacturing, Engineering & Technology, Fifth 7 - 46
Edition, by Serope Kalpakjian and Steven R.
Schmid.
 Computer-
Integrated
Manufacturing
(CIM)

ASRS and AGVs

Figure 7.9
© 2014 Pearson Education 7 - 47