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Process Strategy and Capacity Planning. Introduction What: Making process and capacity decisions Where: Produce goods and services Why: Long term effects.

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Presentation on theme: "Process Strategy and Capacity Planning. Introduction What: Making process and capacity decisions Where: Produce goods and services Why: Long term effects."— Presentation transcript:

1 Process Strategy and Capacity Planning

2 Introduction What: Making process and capacity decisions Where: Produce goods and services Why: Long term effects on company

3 Process Focus Complete jobs on demand Low volume High variety Job shop Products move between processes High flexibility

4 Repetitive Focus Modules Assemble Modules into finished products More structure Less flexibility Some customizing

5 Product Focus Produce one product High volume Low variety Continuous process

6 Mass Customization Focus Individualized goods and services What customer wants when they want it Volume of product focus with flexibility of process focus

7 Comparing Process Choices ProcessRepetitiveProductMass Cust Quantity/ Variety Small / Large Long runs, some options Large / SmallLarge / Large EquipmentGeneralSpecial Flexible People/TrainingSkilledModest TrainLess skilledSkilled Job InstructionsManySomeFewMany Raw MaterialsLargeJITSmall Work in ProcessHighJITLow SpeedSlowMediumFast Finished GoodsTo orderTo forecast To order SchedulingComplexForecastSimpleComplex CostsLow fixedHigh fixed CostingHardEasy Hard

8 Process Analysis Tools Designed to achieve competitive advantage? Eliminate steps that do not add value? Maximize customer value? Win orders?

9 Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow

10 Time-Function Mapping Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Move Order WIP Product 12 days1 day 13 days4 days10 days9 days

11 Process Charts

12 Service Blueprinting

13 Process Design for Services Mass ServiceProfessional Service Service FactoryService Shop Commercial Banking General purpose law firms Fine dining restaurants Hospitals Airlines Full-service stockbroker Retailing Personal banking Boutiques Law clinics Fast food restaurants Warehouse and catalog stores No frills airlines Limited service stockbroker For-profit hospitals Degree of Interaction and Customization Degree of Labor Intensity Low High High Low

14 Process Design for Services Layout Human Resources Technology

15 Process Reengineering Design of Process based on initial assumptions Assumptions change! Rethink and redesign Flexibility

16 Capacity Planning Design Capacity = maximum theoretical output of system Effective Capacity = Capacity expected in current operation Utilization = Actual Output / Design Capacity Efficiency = Actual Output / Effective Capacity

17 Capacity Planning Anticipated Production = Design Capacity x Effective Capacity x Efficiency

18 Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity leads demand with an incremental expansion

19 Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity leads demand with a one-step expansion

20 Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity lags demand with an incremental expansion

21 Capacity Expansion Expected Demand Time in Years Demand New Capacity Attempts to have an average capacity, with an incremental expansion

22 Approaches to Capacity Expansion May need to manage demand through: Staffing changes Adjusting equipment and processes Increasing throughput

23 Break-even Analysis Fixed Costs Variable Costs Contribution Revenue Function Crossover Chart Net Present Value

24 Operations Technology

25 Design Technology Internet Intranet CAD DFMA 3-D Object Modelling STEP CAM Virtual Reality

26 Production Technology Numerical Control Process Control Vision Systems Robots Automated Storage and Retrieval Systems Automated Guided Vehicle Flexible Manufacturing System Computer Integrated Manufacturing

27 Information Technology Transaction Processing System Automatic Identification System Management Information System Artificial Intelligence Expert System Fuzzy Logic Neural Network

28 Information Technology Enterprise Resource Planning (ERP) Automate and integrate processes Share common data SAP, JD Edwards, BAAN, PeopleSoft


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