PRODUCTION

OPERATIONS
MANAGEMENT
PROCESS STRATEGY
 Four Process Strategy
Process Strategies
 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
Four Basic Strategies
 Process focus
 Repetitive focus
 Product focus
 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
 Process Focus
Hospital
Many inputs
(surgeries, sick patients,
baby deliveries, emergencies)

High variety of outputs

(uniquely treated patients)
 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
 Repetitive Focus

Automobile Assembly Line

Raw materials and
component inputs

Modules

Modules combined for

many output options
 Product Focus
 High-volume, low-variety
 The facilities are organized around products
 Long, continuous production runs enable efficient processes
 Typically, high fixed cost but low variable cost
 Generally, less skilled labor required than in Process Focused
 Product Focus
Potato Chips Manufacturing Plant
Few inputs
(corn, potatoes, water,
seasoning)

Output variation in size, shape,

and packaging
 Mass Customization

 Low-cost, high-volume, efficient production of individually customized

offerings
 Producing goods and services to meet individual customer’s need with near
mass production efficiency
 Achieves economies of scope
 Typically, high fixed cost but low variable cost
 Mass Customization

Computer Manufacturing
Many parts and component inputs

Many modules

Many output versions

 Comparison of Process Choices Part A

Comparisons Between:
 Process focus

 Repetitive focus

 Product focus

 Mass customization
 Comparison of Process Choices Part A

Process Focus Repetitive Focus Product Focus Mass

(Low volume, (Modular) (High-volume, Customization
high variety) low-variety) (High-volume,
high-variety)

Small quantity, Long runs, Large quantity, Large quantity,

large variety of standardized small variety of large variety of
products product made products products
from modules

General purpose Special Special purpose Rapid changeover

equipment equipment aids in equipment on flexible
use of assembly equipment
line

Operators are Employees are Operators are Flexible operators

broadly skilled modestly trained less broadly are trained for the
skilled necessary
customization
 Comparison of Process Choices Part A

Process Focus Repetitive Focus Product Focus Mass

(Low volume, (Modular) (High-volume, Customization
high variety) low-variety) (High-volume,
high-variety)

Many job Repetition Few work orders Custom orders

instructions as reduces training and job require many job
each job and changes in instructions instructions
changes job instructions because jobs
standardized

Raw material JIT procurement Raw material Raw material

inventories high techniques used inventories are inventories are
low low

Work-in-process JIT inventory Work-in-process Work-in-process

is high techniques used inventory is low inventory driven
down by JIT, lean
production
 Comparison of Process Choices Part B

Comparisons Between:
 Process focus

 Repetitive focus

 Product focus

 Mass customization
 Comparison of Process Choices Part B

Process Focus Repetitive Focus Product Focus Mass

(Low volume, (Modular) (High-volume, Customization
high variety) low-variety) (High-volume,
high-variety)

Units move slowly Movement is Swift movement of Goods move swiftly

through the plant measured in hours unit through the through the facility
and days facility is typical

Finished goods Finished goods made Finished goods made Finished goods often
made to order to frequent forecast to forecast and stored made to order

Scheduling is Scheduling based on Relatively simple Sophisticated

complex, trade-offs building various scheduling, scheduling required
between inventory, models from modules establishing output to accommodate
availability, to forecasts rate to meet forecasts customer orders
customer service
 Comparison of Process Choices Part B

Process Focus Repetitive Focus Product Focus Mass

(Low volume, (Modular) (High-volume, Customization
high variety) low-variety) (High-volume,
high-variety)

Fixed costs low, Fixed costs Fixed costs high, Fixed costs high,
variable costs dependent on variable costs low variable costs
high flexibility of the must be low
facility

Costing Costs usually High fixed costs High fixed costs

estimated before known due to mean costs and dynamic
job, not known extensive dependent on variable costs
until after job is experience utilization of make costing a
complete capacity challenge
 Flow Diagram

Process Flow Diagram is a schematic or drawing of the movement of

material, product, or people.
 Flow Diagram

Customer

Purchasing Customer sales

representative

Vendors
PREPRESS DEPT
Accounting Receiving
PRINTING DEPT
Warehouse
COLLATING GLUING, BINDING,
DEPT STAPLING, LABELING

Information flow
POLYWRAP DEPT
Material flow

SHIPPING
 Flow Diagram

Frame tube Frame-building Frame Hot-paint

bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests

Air cleaners Oil tank work cell

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Roller testing
Crating
 Time-function Mapping

Time-function mapping (or process mapping) is a modified flowchart

with time added on the horizontal axis.
 Time-function Mapping

Order Receive
Customer product product

Process
Sales order

Production Wait
control

Plant A Print

Warehouse Wait Wait Wait

Plant B Extrude

Transport Move Move

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

52 days
 Time-function Mapping

Order Receive
Customer product product

Process
Sales order

Production
control Wait

Plant Print Extrude

Warehouse Wait

Transport Move

1 day 2 days 1 day 1 day 1 day

6 days
 Process Charts

Process charts use symbols, time, and distance to provide an objective and
structured way to analyze and record the activities that make up a process.
Process Charts
 Service Blueprint

Service Blueprint
 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
#1 for service Customer departs

Notify Customer pays bill

Determine
Warm greeting specifics customer
and obtain No and recommend
service request an alternative
Level Standard provider
#2 Can
request service be
Direct done and does
customer to No
customer
waiting room approve? Notify
customer the
car is ready

Yes Yes Perform

Level required work
#3

Potential failure point

Prepare invoice
 Service Process Design
Degree of Customization
Low High
Mass Service Professional Service
Private
banking
Commercial
banking
High General-
Full-service purpose law firms
Degree of Labor

stockbroker
Boutiques
Retailing

Service Factory Law clinics Service Shop

Limited-service Specialized
stockbroker hospitals
Warehouse and Fast food Fine-dining
Low catalog stores restaurants restaurants Hospitals

Airlines

No frills
airlines
 Service Process Design
Improving Service Productivity
Strategy Technique Example
Separation Structure service so Bank customers go to
customers must go a manager to open a
where service is new account, to loan
offered officers for loans, and
to tellers for deposits

Self-service Self-service so Supermarkets and

customers examine, department stores,
compare, and internet ordering
evaluate at their own
pace
 Service Process Design

Strategy Technique Example

Postponement Customizing at Customizing vans at
delivery delivery rather than
at production
Focus Restricting the Limited-menu
offerings restaurant
Modules Modular selection of Investment and
service, modular insurance selection,
production prepackaged food
modules in
restaurants
 Service Process Design

Strategy Technique Example

Automation Precise personnel Automatic teller
scheduling machines
Scheduling Precise personnel Scheduling ticket
scheduling counter personnel at
15-minute intervals
at airlines
Training Clarifying the service Investment
options, explaining counselor, funeral
how to avoid directors, after-sale
problems maintenance
personnel