1. 7 Process Strategy and Sustainability
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
© 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Process Strategies
The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints
© 2011 Pearson Education, Inc. publishing as Prentice Hall

3. Process, Volume, and Variety
Low Volume
Repetitive Process
High Volume
Volume
Figure 7.1
High Variety
one or few units per run,
(allows customization)
Process Focus
projects, job shops (machine, print, hospitals, restaurants)
Arnold Palmer Hospital
Mass Customization
(difficult to achieve, but huge rewards)
Dell Computer
Changes in Modules
modest runs, standardized modules
Repetitive
(autos, motorcycles, home appliances)
Harley-Davidson
Changes in Attributes (such as grade, quality, size, thickness, etc.)
long runs only
Product Focus
(commercial baked goods, steel, glass, beer)
Frito-Lay
Poor Strategy (Both fixed and variable costs are high)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

4. Process Strategies Four basic strategies Process focus
Repetitive focus
Product focus
Mass customization
Within these basic strategies there are many ways they may be implemented
© 2011 Pearson Education, Inc. publishing as Prentice Hall

5. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

6. Manufacturing Process LayoutD G A
Receiving and
Shipping
Assembly
Painting Department
Lathe Department
Milling
Department
Drilling Department
Grinding P

7. Process Focus (low volume, high variety, intermittent processes)
Many inputs
(surgeries, sick patients, baby deliveries, emergencies)
Many different outputs (uniquely treated patients)
Many departments and many routings
(low volume, high variety, intermittent processes)
Arnold Palmer Hospital
Figure 7.2(a)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

8. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

9. Product Focus Raw materials Finished item or customer
Station 1
Station 2
Station 3
Station 4
Finished item
Material
and/or labor
Material
and/or labor
Material
and/or labor
Material
and/or labor
Used for Repetitive or Continuous Processing

10. Product Layout
Product layout sets up production equipment along a product-flow line, and the work in process moves along this line past workstations.
Efficiently produces large numbers of similar items.

11. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

12. Hot mill for finishing, cooling, and coiling
Product Focus
Scrap steel
Ladle of molten steel
Electric furnace A B C
Continuous caster
Continuous cast steel sheared into 24-ton slabs
Hot tunnel furnace ft
Hot mill for finishing, cooling, and coiling D E F G H I
Nucor Steel Plant
© 2011 Pearson Education, Inc. publishing as Prentice Hall

13. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

14. Mass Customization Number of Choices Item 1970s 21st Century
Vehicle models
Vehicle types 18 1,212
Bicycle types ,000
Software titles 0 400,000
Web sites ,000,000
Movie releases per year
New book titles 40, ,000
Houston TV channels 5 185
Breakfast cereals
Items (SKUs) in 14, ,000
supermarkets
LCD TVs
Number of Choices
Item 1970s 21st Century
Table 7.1
© 2011 Pearson Education, Inc. publishing as Prentice Hall

15. Mass Customization Dell Computer (high-volume, high-variety)
Many parts and component inputs
Many output versions
(custom PCs and notebooks)
Many modules
(chips, hard drives, software, cases)
(high-volume, high-variety)
Dell Computer
Figure 7.2(d)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

16. Requirements to Achive Mass Customization/Build-to-Order
Repetitive Focus
Flexible people and equipment (CIM)
Figure 7.3
Modular techniques
Fast Product and Process Design
CAD
Responsive Supply Chains
ERP
Mass Customization
Rapid throughput techniques
Effective scheduling techniques
Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
© 2011 Pearson Education, Inc. publishing as Prentice Hall

17. Comparison of Product and Process Layouts
Description
Type of process
Product
Demand
Volume
Equipment
Sequential arrangement of activities
Continuous, mass production, mainly assembly
Standardized, made to stock
Stable
High
Special purpose
Functional grouping of activities
Intermittent, job shop, batch production, mainly fabrication
Varied, made to order
Fluctuating
Low
General purposee

18. Comparison of Product and Process Layouts
Workers
Inventory
Material handling
Aisles
Scheduling
Goal
Advantage
Limited skills
Low in-process, high finished goods
Fixed path (conveyor)
Narrow
Line balancing
Equalize work at each station
Efficiency
Varied skills
High in-process, low finished goods
Variable path (forklift)
Wide
Dynamic
Minimize material handling cost
Flexibility

19. Comparison of Three Processes Using Crossover Charts
Fixed costs
Variable costs $
Low volume, high variety
Process A
Fixed costs
Variable costs $
Repetitive
Process B
Fixed costs
Variable costs $
High volume, low variety
Process C
Total cost
Total cost
Total cost
400,000
300,000
200,000
Volume $ V2
(6,666) V1
(2,857)
Fixed cost Process C
Fixed cost Process B
Fixed cost Process A
Figure 7.4
© 2011 Pearson Education, Inc. publishing as Prentice Hall

20. Focused Processes Focus brings Less overhead costs Less complexity
More efficiency
© 2011 Pearson Education, Inc. publishing as Prentice Hall

21. Focused Processes Focus can be on:
Customers (Hotel owners: dishwashers)
Products (Caterpillar)
Service (Children hospital)
Technology (SAP: software)
Quality (Rolls-Royce)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

22. Analyzing and Designing Processes
Design the process to achieve a competitive advantage
Analyze the process to eliminate the steps that do not add value
© 2011 Pearson Education, Inc. publishing as Prentice Hall

23. Tools Used for Process Analysis and Design
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time frame
Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization
Process Charts - Uses symbols to show key activities
Service Blueprinting - focuses on customer/provider interaction
© 2011 Pearson Education, Inc. publishing as Prentice Hall

24. Flow Chart Operator takes phone order. Orders wait to be picked up.
Supervisor
inspects
orders.
Order is
fulfilled.
Order waits
for sales rep.
Is order
complete?
Yes No
Orders are
moved to
supervisor’s
in-box.
Orders
wait for
supervisor.

25. “Baseline” Time-Function Map
Customer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Print
Wait
Order
WIP
Extrude
Wait
WIP
Product
Move
Wait
WIP
12 days
13 days
1 day
4 days
10 days
0 day
52 days
Figure 7.5
© 2011 Pearson Education, Inc. publishing as Prentice Hall

26. “Target” Time-Function Map
Customer
Sales
Production control
Plant
Warehouse
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Extrude
Wait
Print
Order
WIP
Product
1 day
2 days
6 days
Figure 7.5
© 2011 Pearson Education, Inc. publishing as Prentice Hall

27. Value-Stream Mapping Figure 7.6
© 2011 Pearson Education, Inc. publishing as Prentice Hall

28. Process Charts (Allow us to focus on value-added activities)
Figure 7.7
© 2011 Pearson Education, Inc. publishing as Prentice Hall

29. Service Blueprinting
Helps to identify potential failure points in customer and service provider interaction
Defines three levels of interaction
Level 1: Activities under the control of the customer
Level 2: Interaction between the customer and service provider
Level 3: Activities performed invisibly to the customer
Each level has different management issues
© 2011 Pearson Education, Inc. publishing as Prentice Hall

30. Service Blueprint Poka-Yoke (level 1): Put a bell in driveway so that customer will be noticed
Personal Greeting
Service Diagnosis
Perform Service
Friendly Close
Customer arrives for service.
(3 min)
Warm greeting and obtain service request.
(10 sec) F
Level #1
Notify customer the car is ready.
(3 min)
Customer departs
Customer pays bill.
(4 min) F
Perform required work.
(varies)
Prepare invoice. No
Notify customer and recommend an alternative provider.
(7min)
Standard request.
(3 min)
Determine specifics.
(5 min) No
Can service be done and does customer approve?
Yes F
Level #2
Direct customer to waiting room. F
Yes F
Level #3
Figure 7.8
© 2011 Pearson Education, Inc. publishing as Prentice Hall

31. Improving Service Productivity
Strategy
Technique
Example
Separation
Structure service so customers must go where the service is offered
Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits
Self-service
Self-service so customers examine, compare, and evaluate at their own pace
Supermarkets and department stores
Internet ordering
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

32. Improving Service Productivity
Strategy
Technique
Example
Postponement
Customizing at delivery
Customizing vans at delivery rather than at production
Focus
Restricting the offerings
Limited-menu restaurant
Modules
Modular selection of service
Investment and insurance selection, cell phone billing
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

33. Improving Service Productivity
Strategy
Technique
Example
Automation
Separating services that may lend themselves to some type of automation
Automatic teller machines
Scheduling
Precise personnel scheduling
Scheduling ticket counter personnel at 15-minute intervals at airlines
Training
Clarifying the service options
Explaining how to avoid problems
Investment counselor, wedding organizer
After-sale maintenance personnel
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

34. Technologies to Improve Production and Productivity
CNC Machinery
Automatic identification systems (AISs), RFIS
Vision system - inspection
(video camera & computers)
Robots
Automated storage and retrieval systems (ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

35. CNC Machinery Increased precision Increased productivity
Increased flexibility
Reduced changeover time
© 2011 Pearson Education, Inc. publishing as Prentice Hall

36. CNC Machinery
© 2011 Pearson Education, Inc. publishing as Prentice Hall

37. Automatic Identification Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process automation
Example – Bar codes and RFID
© 2011 Pearson Education, Inc. publishing as Prentice Hall

38. Vision Systems Particular aid to inspection Consistently accurate
Never bored
Modest cost
Superior to individuals performing the same tasks
© 2011 Pearson Education, Inc. publishing as Prentice Hall

39. Robots Perform monotonous or dangerous tasks
Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy
© 2011 Pearson Education, Inc. publishing as Prentice Hall

40. Automated Storage and Retrieval Systems (ASRSs)
Automated placement and withdrawal of parts and products
Reduced errors and labor
Particularly useful in inventory and test areas of manufacturing firms
© 2011 Pearson Education, Inc. publishing as Prentice Hall

41. © 2011 Pearson Education, Inc. publishing as Prentice Hall

42. Illustrated concept of a high-rise AS/RS warehouse
AS/RS High-Rise Warehouse

43. Automated Guided Vehicle (AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
© 2011 Pearson Education, Inc. publishing as Prentice Hall

44. Automated Guided Vehicle (AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
© 2011 Pearson Education, Inc. publishing as Prentice Hall

45. © 2011 Pearson Education, Inc. publishing as Prentice Hall

46. Flexible Manufacturing Systems (FMSs)
Computer controls both the workstation and the material handling equipment
Enhance flexibility and reduced waste
Can economically produce low volume at high quality
Reduced changeover time and increased utilization
Stringent communication requirement between components
© 2011 Pearson Education, Inc. publishing as Prentice Hall

47. Flexible Manufacturing System
A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black.
Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.
ISBN © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

48. Computer-Integrated Manufacturing (CIM)
Extension of flexible manufacturing systems
Backwards to engineering and inventory control
Forward into warehousing and shipping
Can also include financial and customer service areas
Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production
© 2011 Pearson Education, Inc. publishing as Prentice Hall

49. Computer-Integrated Manufacturing (CIM)
Figure 7.10
© 2011 Pearson Education, Inc. publishing as Prentice Hall

50. Sustainability (Four Rs)
Sustainability in production processes
Resources
Recycling
Regulations
Reputation
© 2011 Pearson Education, Inc. publishing as Prentice Hall

51. Sustainability Resources
- doing laundry atnight to reduce electricity costs (hotels)
Recycling
BMW uses recycled plastics
© 2011 Pearson Education, Inc. publishing as Prentice Hall

52. Sustainability Reputation
- Frito-Lay built a plant powered by solar energy in California and advertised this in its products
Regulations
Cars with higher CO2 emissions pay higher taxes
© 2011 Pearson Education, Inc. publishing as Prentice Hall