Operations

Management
Process Strategy
Process Strategies
 Involves determining how to produce a good
or provide a service within constraints
 Objective
 Meet or exceed customer requirements
 Meet cost & managerial goals
 Has long-run effects
 Production efficiency
 Product & volume flexibility
 Cost & quality
Fit of Process, Volume, and Variety
Low-Volume Repetitive Process High-Volume
(Intermittent) (Modular) (Continuous)

Process focus Mass

High Variety
One or few units per projects, job shop, Customization
run, high variety (print, carpentry) (difficult to achieve,
(allows customization) Standard Register but huge rewards)
Dell Computer Co.,
Changes in modules Repetitive Levis Jeans
Modest runs, standardized (autos, motorcycles)
modules Harley Davidson
Product focus
Low Variety; Changes
in attributes (such as (commercial baked
grade, quality, size, goods, steel, glass)
thickness, etc.) Steel, Cement
Long runs only
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 Product A
Operation
 Other names
1 2 3
 Job shop

Product B
Process-Focused Example
Custom Woodworking Shop
Cutting Planing Shaping Assembly Sanding Finishing
1 2 5 6 7

Job A 2 3

Job B 3 4

1 4 5 6

Drilling Turning
Process Focus - Pros & Cons

 Advantages
 Greater product flexibility
 More general purpose equipment – equipments
not dedicated to one product

 Disadvantages
 High production cost per unit
 More difficult production planning & control
 Low equipment utilization (5% to 25%)
Process-Focus Examples

Bank

Hospital

Machine
Shop
Repetitive Focused Strategy
 Facilities often organized by assembly lines
 Characterized by modules
 Parts & assemblies made in modules
 Modules combined for many output options
 Other names
 Assembly line
 Production line
 E.g. auto-manufacturing, pc’s, house-hold appliances,
etc
Assembly Line Example
Raw Material Components
2 4

Assemblies Fin. Goods

1 3 5 7
Raw Material Components Subassem.

Product/Material Flow
Production Operation
Repetitive Focus - Considerations

 Product focused process that uses modules

 More structured than process-focused, less structured

than product focused

 Enables semi-customization

 Using modules, it enjoys economic advantage of

continuous process, and custom advantage of low-
volume, moderately high-variety model
Repetitive Focus - Examples

Fast
Clothes
Food
Dryer
McDonald’s
over 95 billion served

Truck
Repetitive Focus
Product-Focused Strategy
 Facilities are organized by product
 High volume, low variety
 Conversion or further processing of undifferentiated
materials such as petroleum, chemicals, or beer
 Follows a predetermined sequence of steps, but flow is
continuous rather than discrete – highly standardized
 Other names
 Line flow production
 Continuous production
Production Process at
NUCOR Steel
Product Focus - Pros & Cons

 Advantages
 Lower production 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
Product-Focused Examples

Soft Drinks
(Continuous,
then Discrete)

Paper (Continuous)
Mass Customization

 Using technology and imagination to rapidly

mass-produce products that cater to 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