Presentation on theme: "Processes and Technology"— Presentation transcript:
1 Processes and Technology Chapter 6Processes and Technology
2 Copyright 2011 John Wiley & Sons, Inc. Lecture OutlineProcess PlanningProcess AnalysisProcess InnovationTechnology DecisionsCopyright 2011 John Wiley & Sons, Inc.
3 Copyright 2011 John Wiley & Sons, Inc. Process PlanningProcessGroup of related tasks with specific inputs & outputsProcess designtasks to be done & how they are coordinated among functions, people, & organizationsProcess strategyan organization’s overall approach for physically producing goods and servicesProcess planningconverts designs into workable instructions for manufacture or deliveryCopyright 2011 John Wiley & Sons, Inc.
4 Copyright 2011 John Wiley & Sons, Inc. Process StrategyVertical integrationextent to which firm will produce inputs and control outputs of each stage of production processCapital intensitymix of capital (i.e., equipment, automation) and labor resources used in production processProcess flexibilityease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availabilityCustomer involvementrole of customer in production processCopyright 2011 John Wiley & Sons, Inc.
5 Copyright 2011 John Wiley & Sons, Inc. OutsourcingCostCapacityQualitySpeedReliabilityExpertiseCopyright 2011 John Wiley & Sons, Inc.
6 Copyright 2011 John Wiley & Sons, Inc. Process SelectionProjectsone-of-a-kind production of a product to customer orderBatch productionprocess many different jobs at the same time in groups or batchesMass productionproduce large volumes of a standard product for a mass marketContinuous productionused for very-high volume commodity productsCopyright 2011 John Wiley & Sons, Inc.
7 Copyright 2011 John Wiley & Sons, Inc. Sourcing ContinuumCopyright 2011 John Wiley & Sons, Inc.
8 Product-Process Matrix Copyright 2011 John Wiley & Sons, Inc.
9 Copyright 2011 John Wiley & Sons, Inc. Types of ProcessesPROJECTBATCHMASSCONT.Type of productUniqueMade-to- order(customized)Made-to- stock(standardized )CommodityType of customerOne-at-a-timeFew individualcustomersMassmarketMassmarketProduct demandInfrequentFluctuatesStableVery stableCopyright 2011 John Wiley & Sons, Inc.
10 Types of Processes PROJECT BATCH MASS CONT. Demand volume Very low Low to mediumHighVery highNo. of different productsInfinite varietyMany, variedFewVery fewProduction systemLong-term projectDiscrete, job shopsRepetitive, assembly linesContinuous, process industriesCopyright 2011 John Wiley & Sons, Inc.
11 Types of Processes PROJECT BATCH MASS CONT. Equipment Varied General-purposeSpecial-purposeHighly automatedPrimary type of workSpecialized contractsFabricationAssemblyMixing, treating, refiningWorker skillsExperts, crafts-personsWide range of skillsLimited range of skillsEquipment monitorsCopyright 2011 John Wiley & Sons, Inc.
12 Types of Processes PROJECT BATCH MASS CONT. Advantages Dis-advantages Custom work, latest technologyFlexibility, qualityEfficiency,speed,low costHighly efficient,large capacity,ease of controlDis-advantagesNon-repetitive, small customer base, expensiveCostly, slow,difficult tomanageCapitalinvestment;lack ofresponsivenessDifficult to change,far-reaching errors,limited varietyExamplesConstruction, shipbuilding, spacecraftMachine shops,print shops,bakeries,educationAutomobiles,televisions,computers,fast foodPaint, chemicals, foodstuffsCopyright 2011 John Wiley & Sons, Inc.
13 Process Selection With Break-Even Analysis Study cost trade-offs based on demand volumeCostFixed costsconstant regardless of the number of units producedVariable costsvary with the volume of units producedRevenueprice at which an item is soldCopyright 2011 John Wiley & Sons, Inc.
14 Process Selection With Break-Even Analysis Total revenueprice times volume soldProfitdifference between total revenue and total costCopyright 2011 John Wiley & Sons, Inc.
15 Process Selection With Break-Even Analysis Total cost = fixed cost + total variable costTC = cf + vcvTotal revenue = volume x priceTR = vpProfit = total revenue - total costZ = TR – TC = vp - (cf + vcv)cf = fixed costV = volume (i.e., number of units produced and sold)cv = variable cost per unitp = price per unitCopyright 2011 John Wiley & Sons, Inc.
16 Process Selection With Break-Even Analysis Solving for Break-Even Point (Volume)TR = TCvp = cf + vcvvp - vcv = cfv(p - cv) = cfv =cfp - cvCopyright 2011 John Wiley & Sons, Inc.
17 Copyright 2011 John Wiley & Sons, Inc. Break-Even AnalysisFixed cost = cf = $2,000Variable cost = cv = $50 per unitPrice = p = $100 per unitBreak-even point isv = = = 40 unitscfp - cv2000Copyright 2011 John Wiley & Sons, Inc.
18 Break-Even Analysis: Graph Dollars$3,000 —$2,000 —$1,000 —Total cost lineTotal revenue line40 UnitsBreak-even pointCopyright 2011 John Wiley & Sons, Inc.
19 Process Selection – Multiple Processes $2,000 + $50v = $10,000 + $30v$20v = $8,000v = 400 unitsProcess A Process BBelow or equal to 400, choose AAbove or equal to 400, choose BCopyright 2011 John Wiley & Sons, Inc.
20 Break-Even Analysis: Graph Copyright 2011 John Wiley & Sons, Inc.
21 Copyright 2011 John Wiley & Sons, Inc. Process PlansSet of documents that detail manufacturing and service delivery specificationsassembly chartsoperations sheetsquality-control check-sheetsCopyright 2011 John Wiley & Sons, Inc.
22 Assembly ChartCopyright 2011 John Wiley & Sons, Inc.
23 Operations Sheet for Plastic Part Part name Crevice ToolPart NoUsage Hand-VacAssembly No. 520Oper. No. Description Dept. Machine/Tools Time10 Pour in plastic bits 041 Injection molding 2 min20 Insert mold 041 #076 2 min30 Check settings , 67, min & start machine40 Collect parts & lay flat 051 Plastics finishing 10 min50 Remove & clean mold 042 Parts washer 15 min60 Break off rough edges 051 Plastics finishing 10 minCopyright 2011 John Wiley & Sons, Inc.
24 Copyright 2011 John Wiley & Sons, Inc. Process AnalysisSystematic study of all aspects of a processmake it fastermore efficientless costlymore responsiveBasic toolsprocess flowchartsdiagramsmapsCopyright 2011 John Wiley & Sons, Inc.
25 Flow Charts in Microsoft Visio Copyright 2011 John Wiley & Sons, Inc.
26 Copyright 2011 John Wiley & Sons, Inc. Building a FlowchartDetermine objectivesDefine process boundariesDefine units of flowChoose type of chartObserve process and collect dataMap out processValidate chartCopyright 2011 John Wiley & Sons, Inc.
27 Copyright 2011 John Wiley & Sons, Inc. Process FlowchartsLook at manufacture of product or delivery of service from broad perspectiveIncorporatenonproductive activities (inspection, transportation, delay, storage)productive activities (operations)Copyright 2011 John Wiley & Sons, Inc.
28 Process Flowchart Symbols OperationInspectionTransportationDelayStorageCopyright 2011 John Wiley & Sons, Inc.
29 Process Flowchart of Apple Processing Copyright 2011 John Wiley & Sons, Inc.
30 Copyright 2011 John Wiley & Sons, Inc. Flowcharts in ExcelCopyright 2011 John Wiley & Sons, Inc.
31 Process Map or Swimlane Chart of Restaurant Service Copyright 2011 John Wiley & Sons, Inc.
32 Simple Value Chain Flowchart Copyright 2011 John Wiley & Sons, Inc.
33 Process InnovationTotal redesign of a process for breakthrough improvementsBreakthrough ImprovementContinuous improvement refines the breakthroughContinuous improvement activities peak; time to reengineer processCopyright 2011 John Wiley & Sons, Inc.
34 From Function to Process ManufacturingAccountingSalesPurchasingProduct DevelopmentOrder FulfillmentSupply Chain ManagementCustomer ServiceFunctionProcessCopyright 2011 John Wiley & Sons, Inc.
35 Process Innovation Baseline Data Customer Benchmark Requirements Data StrategicDirectivesGoals for Process PerformancePilot Studyof New DesignDetailedProcess MapHigh - levelProcess mapGoalsMet?InnovativeIdeasDesignPrinciplesModelValidationCustomerRequirementsKeyPerformanceMeasuresFull ScaleImplementationBaseline DataBenchmarkDataNoYesCopyright 2011 John Wiley & Sons, Inc.
36 High-Level Process Map Copyright 2011 John Wiley & Sons, Inc.
37 Principles for Redesigning Processes Remove waste, simplify, and consolidate similar activitiesLink processes to create valueLet the swiftest and most capable enterprise execute the processFlex process for any time, any place, any wayCapture information digitally at the source and propagate it through processCopyright 2011 John Wiley & Sons, Inc.
38 Principles for Redesigning Processes Provide visibility through fresher and richer information about process statusFit process with sensors and feedback loops that can prompt actionAdd analytic capabilities to the processConnect, collect, and create knowledge around process through all who touch itPersonalize process with preferences and habits of participantsCopyright 2011 John Wiley & Sons, Inc.
39 Techniques for Generating Innovative Ideas Vary the entry point to a problemin trying to untangle fishing lines, it’s best to start from the fish, not the polesDraw analogiesa previous solution to an old problem might workChange your perspectivethink like a customerbring in persons who have no knowledge of processCopyright 2011 John Wiley & Sons, Inc.
40 Techniques for Generating Innovative Ideas Try inverse brainstormingwhat would increase costwhat would displease the customerChain forward as far as possibleif I solve this problem, what is the next problemUse attribute brainstorminghow would this process operate if. . .our workers were mobile and flexiblethere were no monetary constraintswe had perfect knowledgeCopyright 2011 John Wiley & Sons, Inc.
41 Copyright 2011 John Wiley & Sons, Inc. Technology DecisionsFinancial justification of technologyPurchase costIncludes add-ons to make technology workOperating CostsVisualize how the technology will be usedAnnual SavingsBetter quality and efficiency save moneyRevenue EnhancementNew technology can enhance revenurCopyright 2011 John Wiley & Sons, Inc.
42 Copyright 2011 John Wiley & Sons, Inc. Technology DecisionsFinancial justification of technologyReplacement AnalysisWhen to upgrade to new technology depends on competitive environmentRisk and UncertaintyIt is risky to invest and risky toPiecemeal AnalysisMake sure new and existing technology are compatibleCopyright 2011 John Wiley & Sons, Inc.
43 Components of e-Manufacturing Copyright 2011 John Wiley & Sons, Inc.
44 Copyright 2011 John Wiley & Sons, Inc. Product TechnologyComputer-aided design (CAD)Creates and communicates designs electronicallyGroup technology (GT)Classifies designs into families for easy retrieval and modificationComputer-aided engineering (CAE)Tests functionality of CAD designs electronicallyCollaborative product commerce (CPC)Facilitates electronic communication and exchange of information among designers and suppliersCopyright 2011 John Wiley & Sons, Inc.
45 Copyright 2011 John Wiley & Sons, Inc. Product TechnologyProduct data management (PDM)Keeps track of design specs and revisions for the life of the productProduct life cycle management (PLM)Integrates decisions of those involved in product development, manufacturing, sales, customer service, recycling, and disposalProduct configurationDefines products “configured” by customers who have selected among various options, usually from a Web siteCopyright 2011 John Wiley & Sons, Inc.
46 Copyright 2011 John Wiley & Sons, Inc. Process TechnologyStandard for exchange of product model data (STEP)Set standards for communication among different CAD vendors; translates CAD data into requirements for automated inspection and manufactureComputer-aided design and manufacture (CAD/CAM)Electronic link between automated design (CAD) and automated manufacture (CAM)Computer aided process (CAPP)Generates process plans based on database of similar requirementsE-procurementElectronic purchasing of items from e-marketplaces, auctions, or company websitesCopyright 2011 John Wiley & Sons, Inc.
47 Manufacturing Technology Computer numerically control (CNC)Machines controlled by software to perform a range of operations with the help of automated tool changers; collects processing information and quality dataFlexible manufacturing system (FMS)A collection of CNC machines connected by an automated material handling system to produce a wide variety of partsRobotsProgrammable manipulators that can perform repetitive tasks; more consistent than workers but less flexibleConveyorsFixed-path material handling; move items along a belt or chain; “reads” package labels and diverts them to correct destinationCopyright 2011 John Wiley & Sons, Inc.
48 Manufacturing Technology Automatic guided vehicle (AGV)Driverless trucks that move material along a specified path; directed by wire or tape embedded in floor or by radio frequenciesAutomated storage and retrieval system (ASRS)An automated warehouse; items placed in a storage system and retrieved by fast-moving stacker cranes; controlled by computerProcess ControlContinuous monitoring of automated equipment; makes real-time decisions on ongoing operation, maintenance, and qualityComputer-integrated manufacturing (CIM)Automated manufacturing systems integrated through computer technology; also called e-manufacturingCopyright 2011 John Wiley & Sons, Inc.
49 Information Technology Business – to –Business (B2B)E-transactions between businesses usually via the InternetBusiness – to –Consumer (B2C)E-transactions between businesses and their customers usually via the InternetInternetA global information system of computer networks that facilitates communication and data transferIntranetCommunication networks internal to an organization; can also be password (i.e., firewall) protected sites on the InternetCopyright 2011 John Wiley & Sons, Inc.
50 Information Technology ExtranetIntranets connected to the Internet for shared access with select suppliers, customers, and trading partnersBar CodesSeries of vertical lines printed on packages that identify item and other informationRadio Frequency Identification tags (RFID)Integrated circuit embedded in a tag; can send and receive information; a “twenty-first century bar code” with read/write capabilitiesElectronic data interchange (EDI)Computer-to-computer exchange of business documents over a proprietary network; very expensive and inflexibleCopyright 2011 John Wiley & Sons, Inc.
51 Information Technology Extensible markup language (XML)A markup language that facilitates computer–to–computer communication over the Internet by tagging data before its is sentEnterprise resource planning (ERP)Software for managing key functions of an enterprise, including sales, marketing, finance, accounting, production, materials management & human resourcesSupply chain management (SCM)Software to manage flow of goods and information among a network of suppliers, manufacturers and distributorsCustomer relationship management (CRM)Software to manage interactions with customers; compiling and analyzing customer dataCopyright 2011 John Wiley & Sons, Inc.
52 Information Technology Decision support systems (DSS)Information system to help managers make decisions; includes quantitative modeling components and interactive components for what-if analysisExpert systems (ES)A computer system that uses the knowledge of experts to diagnose or solve a problemArtificial intelligence (AI)Field of study replicating elements of human thought and natural processes in software; includes expert systems, genetic algorithms, neural networks, and fuzzy logicCopyright 2011 John Wiley & Sons, Inc.
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