Chapter-Product Design, Process & Layout Strategies

Product Design,
Process & Layout

Strategies 2
SOURCE:
Heizer and Render, Operations Management, 11thEdition,
Principles of Operations Management, Ninth Edition
© 2014 Pearson Education, Inc.
© 2014 Pearson Education, Inc. 2-1

PRODUCT DESIGN

Product Strategy Options
► Differentiation
► Shouldice Hospital
► Low cost
► Taco Bell
► Rapid response
► Toyota

Product Life Cycle
Cost of development and production
Sales, cost, and cash flow
Sales revenue
Net revenue (profit)
Cash
flow
Negative
cash flow Loss
Introduction Growth Maturity Decline
Figure 5.2

Product Life Cycle
Introductory Phase
► Fine tuning may warrant
unusual expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. Supplier development

Product Life Cycle
Growth Phase
► Product design begins to

stabilize
► Effective forecasting of capacity
becomes necessary
► Adding or enhancing capacity
may be necessary

Product Life Cycle
Maturity Phase
► Competitors now established

► High volume, innovative
production may be needed
► Improved cost control, reduction
in options, paring down of
product line

Product Life Cycle
Decline Phase
► Unless product makes a special

contribution to the organization,
must plan to terminate offering

Product Life Cycle Costs
100 –
Costs committed
80 –
Percent of total cost
60 –
Costs incurred
40 –
20 –
Ease of change
0–
Concept Detailed Manufacturing Distribution,

design design service,
prototype and disposal
Generating New Products
1. Understanding the customer
2. Economic change
3. Sociological and demographic
change
4. Technological change
5. Political and legal change
6. Market practice, professional
standards, suppliers, distributors
© 2014 Pearson Education, Inc. 2 - 10

Product
Concept
Development Stages
Feasibility Figure 5.3
Customer Requirements
Functional Specifications
Product Specifications Scope for

Scope of design and
product Design Review engineering
development teams
team Test Market
Introduction
Evaluation

Quality Function Deployment
1. Identify customer wants
2. Identify how the good/service will satisfy customer
wants
3. Relate customer wants to product hows
4. Identify relationships between the firm’s hows
5. Develop customer importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical
attributes
QFD House of Quality
Interrelationships
Customer
importance
How to satisfy
ratings
customer wants
assessment
Competitive
What the Relationship
customer matrix
wants
Target values Weighted

rating
Technical
evaluation

House of Quality Sequence
Deploying resources through the organization
in response to customer requirements
Quality
plan
Production
process
Production
Specific
House
process
components
components
House 4
Specific
Design
characteristics
characteristics
3
House
Design
2
requirements
Customer
House
1
Figure 5.4
PROCESS STRATEGY

Process Strategies
► The objective is to create a process to
produce products that meets customer
requirements within cost and other
managerial constraints
► How to produce a product or provide a
service that
► Meets or exceeds customer requirements
► Meets cost and managerial goals
► Has long term effects on
► Efficiency and production flexibility
► Costs and quality
Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive Process High
Volume Volume
High Variety
one or few units per Process Focus Mass Customization
run, projects, job shops (difficult to achieve, but huge
(allows (machine, print, hospitals, rewards)
customization) restaurants) Dell Computer
Arnold Palmer Hospital
Changes in
Modules
modest runs, Repetitive
standardized (autos, motorcycles, home
modules appliances)
Harley-Davidson
Changes in
Attributes (such as
grade, quality, size, Poor Strategy Product Focus
thickness, etc.) (Both fixed and (commercial baked goods,
long runs only variable costs are steel, glass, beer)
high) Frito-Lay
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
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
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

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
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

Mass Customization
► Imaginative product design
► Flexible process design
► Tightly controlled inventory
management
► Tight schedules
► Responsive supply-chain partners

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)
Small quantity and Long runs, usually Large quantity Large quantity and
large variety of a standardized and small variety large variety of
products product from of products products
modules
Broadly skilled Moderately trained Less broadly Flexible operators

operators employees skilled operators
Instructions for Few changes in the Standardized job Custom orders

each job instructions instructions requiring many job
instructions
High inventory Low inventory Low inventory Low inventory

relative to the value
of the product
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)
Finished goods are Finished goods are Finished goods Finished goods are
made to order and made to frequent are made to a build-to-order
not stored forecasts forecast and (BTO)
stored
Scheduling is Scheduling is Scheduling is Sophisticated

complex routine routine scheduling
accommodates
custom orders
Fixed costs are Fixed costs are Fixed costs are Fixed costs tend to
low and variable dependent on high and variable be high and variable
costs high flexibility of the costs low costs low
facility

Process Analysis and
Design
► Flowcharts
► Shows the movement of materials
► Harley-Davidson flowchart
► Time-Function Mapping
► Shows flows and time frame

“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
“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)
Process Analysis and
Design
► Value-Stream Mapping
► Where value is added in the entire
production process, including the supply
chain
► Extends from the customer back to the
suppliers

Value-Stream Mapping
1. Begin with symbols for customer, supplier, and

production to ensure the big picture
2. Enter customer order requirements
3. Calculate the daily production requirements
4. Enter the outbound shipping requirements and
delivery frequency
5. Determine inbound shipping method and
delivery frequency

6. Add the process steps (i.e., machine, assemble)
in sequence, left to right
7. Add communication methods, add their
frequency, and show the direction with arrows
8. Add inventory quantities (shown with )
between every step of the entire flow I
9. Determine total working time (value-added
time) and delay (non-value-added time)

Figure 7.5

Process Chart
© 2014 Pearson Education, Inc. Figure

7 - 33 7.6
Service Blueprinting
► Focuses on the customer and provider
interaction
► Defines three levels of interaction
► Each level has different management
issues
► Identifies potential failure points

Service Blueprint
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. (7 min)
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 7.7
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 the manager to open a new
service is offered account, to loan officers for
loans, and to tellers for deposits
Self-service Self-service so customers Supermarkets and department
examine, compare, and 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

Improving Service
Productivity
TABLE 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE
Modules Modular selection of service Investment and insurance
Modular production selection
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
FACILITY LAYOUT

Strategic Importance of
Layout Decisions
The objective of layout strategy
is to develop an effective and
efficient layout that will meet the
firm’s competitive requirements

Layout Design Considerations
► Higher utilization of space, equipment, and
people
► Improved flow of information, materials, or
people
► Improved employee morale and safer
working conditions
► Improved customer/client interaction
► Flexibility

Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout

Types of Layout
1. Office layout: Positions workers, their
equipment, and spaces/offices to
provide for movement of information
2. Retail layout: Allocates shelf space
and responds to customer behavior
3. Warehouse layout: Addresses trade-
offs between space and material
handling

Types of Layout
4. Fixed-position layout: Addresses the
layout requirements of large, bulky
projects such as ships and buildings
5. Process-oriented layout: Deals with
low-volume, high-variety production
(also called job shop or intermittent
production)

Types of Layout
6. Work cell layout: Arranges machinery
and equipment to focus on production
of a single product or group of related
products
7. Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or continuous
production

Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Office Locate workers requiring frequent Allstate Insurance

contact close to one another Microsoft Corp.
Retail Expose customer to high-margin Kroger’s Supermarket

items Walgreen’s
Bloomingdale’s
Warehouse Balance low-cost storage with low- Federal-Mogul’s warehouse

(storage) cost material handling The Gap’s distribution center
Project (fixed Move material to the limited Ingall Ship Building Corp.
position) storage areas around the site Trump Plaza
Pittsburgh Airport

Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Job Shop Manage varied material flow for Arnold Palmer Hospital
(process each product Hard Rock Cafe
oriented) Olive Garden
Work Cell Identify a product family, build Hallmark Cards

(product teams, cross train team Wheeled Coach Ambulances
families) members
Repetitive/ Equalize the task time at each Sony’s TV assembly line

Continuous workstation Toyota Scion
(product
oriented)

Good Layouts Consideration
► Material handling equipment

► Capacity and space requirements
► Environment and aesthetics
► Flows of information
► Cost of moving between various work
areas

Office Layout
► Grouping of workers, their equipment,
and spaces to provide comfort, safety,
and movement of information
► Movement of information is main
distinction
► Typically in state of flux due to
frequent technological changes

Relationship Chart
Figure 9.1
Office Layout
► Three physical and social aspects

► Proximity
► Privacy
► Permission
► Two major trends

► Information technology
► Dynamic needs for space and services

Supermarket Retail
Layout
▶ Objective is to maximize profitability per square
foot of floor space
▶ Sales and profitability vary directly with customer
exposure

Five Helpful Ideas for
Supermarket Layout
1. Locate high-draw items around the periphery of the
store
2. Use prominent locations for high-impulse and high-
margin items
3. Distribute power items to both sides of an aisle and
disperse them to increase viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of
lead-off department

Store Layout
Figure 9.2
Retail Slotting
▶ Manufacturers pay fees to retailers to get the
retailers to display (slot) their product
▶ Contributing factors
▶ Limited shelf space
▶ An increasing number of new products
▶ Better information about sales through POS data
collection
▶ Closer control of inventory

Servicescapes
1. Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature
2. Spatial layout and functionality - which
involve customer circulation path planning,
aisle characteristics, and product grouping
3. Signs, symbols, and artifacts -
characteristics of building design that carry
social significance

Warehousing and
Storage Layouts
▶ Objective is to optimize trade-offs between
handling costs and costs associated with
warehouse space
▶ Maximize the total “cube” of the warehouse –
utilize its full volume while maintaining low material
handling costs

Warehousing and Storage
Layouts
Material Handling Costs
► All costs associated with the transaction
► Incoming transport
► Storage
► Finding and moving material
► Outgoing transport
► Equipment, people, material, supervision,
insurance, depreciation
► Minimize damage and spoilage
Warehousing and
Storage Layouts
▶ Warehouse density tends to vary inversely with the
number of different items stored
▶ Automated Storage and Retrieval Systems (ASRSs)
can significantly improve warehouse productivity by
an estimated 500%
▶ Dock location is a key design element

Cross-Docking
▶ Materials are moved directly from receiving to
shipping and are not placed in storage in the
warehouse
▶ Requires tight
scheduling and
accurate shipments,
bar code or RFID
identification used for
advanced shipment
notification as
materials are unloaded
Random Stocking
► Typically requires automatic identification
systems (AISs) and effective information systems
► Allows more efficient use of space
► Key tasks
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas

Customizing
▶ Value-added activities performed at the warehouse

▶ Enable low cost and rapid response strategies
▶ Assembly of components
▶ Loading software
▶ Repairs
▶ Customized labeling and packaging

Fixed-Position Layout
▶ Product remains in one place

▶ Workers and equipment come to site
▶ Complicating factors
▶ Limited space at site
▶ Different materials required at different stages of the
project
▶ Volume of materials needed is dynamic

Alternative Strategy
▶ As much of the project as possible is completed off-site in

a product-oriented facility
▶ This can significantly improve efficiency but is only
possible when multiple similar units need to be created

Process-Oriented
Layout
▶ Like machines and equipment are grouped together

▶ Flexible and capable of handling a wide variety of
products or services
▶ Scheduling can be difficult and setup, material
handling, and labor costs can be high

Process-Oriented Layout
Surgery ER triage room Emergency room admissions
Patient A - broken leg
Patient B - erratic heart

pacemaker
Laboratories
Radiology ER Beds Pharmacy Billing/exit
Figure 9.3

Computer Software
▶ Graphical approach only works for small problems

▶ Computer programs are available to solve bigger
problems
► CRAFT ► Factory Flow

► ALDEP ► Proplanner
► CORELAP

Work Cells
▶ Reorganizes people and machines into groups to
focus on single products or product groups
▶ Group technology identifies products that have
similar characteristics for particular cells
▶ Volume must justify cells
▶ Cells can be reconfigured as designs or volume
changes

Advantages of Work Cells
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods
inventories
4. Reduced direct labor cost
5. Heightened sense of employee
participation
6. Increased equipment and machinery
utilization
7. Reduced investment in machinery and
equipment
Requirements of Work
Cells
▶ Identification of families of products
▶ A high level of training, flexibility and empowerment
of employees
▶ Being self-contained, with its own equipment and
resources
▶ Test (poka-yoke) at each station in the cell

Improving Layouts Using
Work Cells
Figure 9.9 (a)
Material
Current layout - workers in

small closed areas.
Improved layout - cross-trained

workers can assist each other. May
be able to add a third worker as
additional output is needed.

Improving Layouts Using
Work Cells
Figure 9.9 (b)
Current layout - straight lines

make it hard to balance tasks Improved layout - in U shape,
because work may not be workers have better access.
divided evenly Four cross-trained workers
were reduced.
U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of workers,
and facilitating inspection

Staffing and Balancing
Work Cells
Determine the takt time
Total work time available
Takt time =
Units required
Determine the number

of operators required
Total operation time required

Workers required =
Takt time

Staffing Work Cells
Example
600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance 60
chart total operation 50

time = 140 seconds
Standard time required

40
30
20
10
Figure 9.10
0
Assemble Paint Test Label Pack for
shipment
© 2014 Pearson Education, Inc. Operations 2 - 73
Staffing Work Cells
Example
600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance
chart total operation
time = 140 seconds
Takt time = (8 hrs x 60 mins) / 600 units

= .8 min = 48 seconds
Total operation time required
Workers required = Takt time
= 140 / 48 = 2.92
Work Balance Charts
▶ Used for evaluating operation times in work cells

▶ Can help identify bottleneck operations
▶ Flexible, cross-trained employees can help address
labor bottlenecks
▶ Machine bottlenecks may require other approaches

Focused Work Center
and Focused Factory
• Focused Work Center
• Identify a large family of similar products that have a large and
stable demand
• Moves production from a general-purpose, process-oriented
facility to a large work cell
• Focused Factory
• A focused work cell in a separate facility
• May be focused by product line, layout, quality, new product
introduction, flexibility, or other requirements

Repetitive and Product-
Oriented Layout
Organized around products or families of
similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase of
life cycle that justifies investment
4. Supplies of raw materials and components are
adequate and of uniform quality

Product-Oriented Layouts
► Fabrication line
► Builds components on a series of machines
► Machine-paced
► Require mechanical or engineering changes to
balance
► Assembly line
► Puts fabricated parts together at a series of
workstations
Both types of lines must be
► Paced by work tasks balanced so that the time
to perform the work at
► Balanced by moving tasks each station is the same

Product-Oriented Layouts
Advantages
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput
Disadvantages
1. High volume is required
2. Work stoppage at any point ties up the whole
operation
3. Lack of flexibility in product or production rates

Assembly-Line
Balancing
▶ Objective is to minimize the imbalance between

machines or personnel while meeting required output
▶ Starts with the precedence relationships
▶ Determine cycle time
▶ Calculate theoretical minimum number of workstations
▶ Balance the line by assigning specific tasks to workstations

Wing Component Example
TABLE 9.2 Precedence Data for Wing Component
ASSEMBLY TIME TASK MUST FOLLOW
TASK (MINUTES) TASK LISTED BELOW
A 10 – This means that
B 11 A tasks B and E
cannot be done
C 5 B until task A has
D 4 B
been completed
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65

TABLE 9.2 Precedence Data for Wing Component
TASK MUST
ASSEMBLY TIME FOLLOW TASK 5
TASK (MINUTES) LISTED BELOW
C
A 10 – 10 11 3 7
B 11 A A B F G
C 5 B 4
3
D 4 B D I
11 11
E 11 A E H
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65

Production time available
per day
Cycle time = Units required per day
= 480 / 40
= 12 minutes per unit 480 available mins
per day
n 40 units required
Minimum number i=1
å Time for task i
of workstations = Cycle time
= 65 / 12
=5.42, or 6 stations

Layout Heuristics That May Be Used to Assign Tasks to
TABLE 9.3
Workstations in Assembly-Line Balancing
1. Longest task time From the available tasks, choose the task
with the largest (longest) task time
2. Most following tasks From the available tasks, choose the task
with the largest number of following tasks
3. Ranked positional From the available tasks, choose the task for
weight which the sum of following task times is the
longest
4. Shortest task time From the available tasks, choose the task
with the shortest task time
5. Least number of From the available tasks, choose the task
following tasks with the least number of subsequent tasks

480 available mins
Figure 9.13 per day
40 units required
Cycle time = 12 mins
Minimum
Station 5 workstations = 5.42 or 6
2
C
10 11 3 7
A B F G
4 3
D Station 3
Station 4 I
11 11
Station 6
Station Station 6
1 E H
Station Station
3 5
480 available mins
per day
40 units required
Cycle time = 12 mins
Minimum
workstations = 5.42 or 6
∑ Task times
Efficiency =
(Actual number of workstations) x (Largest cycle time)
= 65 minutes / ((6 stations) x (12 minutes))
= 90.3%

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Product Design,

Process & Layout

© 2014 Pearson Education, Inc. 2-1

© 2014 Pearson Education, Inc. 2-2

© 2014 Pearson Education, Inc. 2-3

Introduction Growth Maturity Decline

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► Product design begins to

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► Competitors now established

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► Unless product makes a special

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Concept Detailed Manufacturing Distribution,

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Product Specifications Scope for

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Target values Weighted

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Within these basic strategies there are

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Broadly skilled Moderately trained Less broadly Flexible operators

Instructions for Few changes in the Standardized job Custom orders

High inventory Low inventory Low inventory Low inventory

Scheduling is Scheduling is Scheduling is Sophisticated

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Warehouse Wait Wait Wait

Transport Move Move

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

1 day 2 days 1 day 1 day 1 day

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1. Begin with symbols for customer, supplier, and

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Level Customer arrives

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Office Locate workers requiring frequent Allstate Insurance

Retail Expose customer to high-margin Kroger’s Supermarket

Warehouse Balance low-cost storage with low- Federal-Mogul’s warehouse

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Work Cell Identify a product family, build Hallmark Cards

Repetitive/ Equalize the task time at each Sony’s TV assembly line

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► Material handling equipment

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► Three physical and social aspects

► Two major trends

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Chapter-Product Design, Process & Layout Strategies

Chapter-Product Design, Process & Layout Strategies