1. MGT3303 Michel Leseure Process Management MGT3303

2. Michel Leseure Toyota Production System Manufacturer TGW (Things gone wrong) in First Eight Months per 100 cars Chrysler285 GM256 Ford214 Japanese (avg) 132 Toyota55 Notion of Process Capital

3. MGT3303 Michel Leseure Process Design Process design is about preparing production –A process is a sequence of steps performed for a given purpose. –More simply stated, process is what you do. The process integrates people, tools and procedures together –More or less integrated with the product design stage: this integration is a key challenge!

4. MGT3303 Michel Leseure Process Example

5. MGT3303 Michel Leseure Overview of Process Management

6. MGT3303 Michel Leseure Process Strategy Process volume & Standardisation Capital Intensity –The extent to which the selected process is mainly dependent on capital investment (machinery, fixed assets, automation) or not Process flexibility –The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions Vertical integration –The degree to which a firm will handle the whole supply chain process or only a certain stage of the supply chain (e.g. assembly) Customer involvement

7. MGT3303 Michel Leseure Process Volume & Standardisation Source: Adapted from Robert Hay and Steven Wheelwright, Restoring Competitive Edge: Competing through Manufacturing (New York: John Wiley & Sons, 1984).

8. MGT3303 Michel Leseure Capital Intensity Process Selection with Break-Even Analysis –For a single process, find the breakeven point –Among several processes, find the point of indifference

9. MGT3303 Michel Leseure Break-Even Analysis c f = fixed cost v = volume c v = variable cost per unit p =price per unit Total cost = total fixed cost + total variable cost TC = c f + vc v Total revenue = volume x price TR = vp Total profit = total revenue - total cost Z = TR - TC = vp - (c f + vc v ) where,

10. MGT3303 Michel Leseure Solving For Break-Even Point TR = TC vp = (c f + vc v ) vp - vc v = c f v(p - c v ) = c f v = c f p - c v

11. MGT3303 Michel Leseure Break-Even Example Fixed cost c f = $2,000 Variable cost c v = $5 per raft Price p = $10 per raft v = = = 400 rafts c f p - c v 2000 10 - 5

12. MGT3303 Michel Leseure © 1998 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Break-Even Graph $0 $1,000 $2,000 $3,000 $4,000 $5,000 400 Units Dollars TC TR Break even point

13. MGT3303 Michel Leseure Choosing Between Two Processes Find volume where –Cost of process A = Cost of process B Above point of indifference, choose process with lowest variable cost Below point of indifference, choose process with lowest fixed cost

14. MGT3303 Michel Leseure Point Of Indifference $3v = $8,000 v = 2,667 rafts $2,000 + $5v = $10,000 + $2v Process A Process B Below 2,667 rafts, choose A Above 2,667 rafts, choose B

15. MGT3303 Michel Leseure Graphical Solution to Process Selection A B

16. MGT3303 Michel Leseure Process Flexibility Product flexibility: –the ability to introduce a new product whilst incurring only a minor reconfiguration of plant and equipment. Mix flexibility: –the ability to simultaneously produce two different versions of a product, or two different products. Volume flexibility: –the ability to process simultaneously on the same production line large and low volume series without any major cost differences. Delivery flexibility: –the ability to change scheduled delivery times when needed without generating too many delays and too many costs.

17. MGT3303 Michel Leseure Process Flexibility Investment in process flexibility challenge the volume/standardisation trade-off Allows firms to operate away from the diagonal of the product process matrix

18. MGT3303 Michel Leseure Make-Or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise

19. MGT3303 Michel Leseure Process Design/Selection Process selection Specific equipment selection Process plans Process analysis

20. MGT3303 Michel Leseure Documents for Process Plans Blueprints - Drawings of product design Bill of Materials - List of materials and parts Assembly Diagram - Drawing of how parts are combined to form final product Assembly Chart (Product Structure Diagram) Top down view of product components Operations Process Chart - detailed list of operations to make product Routing Sheet - ordered list of m/c’s

21. MGT3303 Michel Leseure Product Structure Diagram (Assembly Chart) Packaged Hand-Vac Hand-Vac Upholstery tool Crevice tool Package Dusting tool Forward housing assembly Rear housing assembly Screw and lock washer assembly

22. MGT3303 Michel Leseure Product Diagram Make base Make feet (4) Make stem Cut cable Purchase bulb holder Assemble base and feet (sub-assembly 1) Inspect for mis-wiring Assemble cable, stem and bulb holder (sub-assembly 2) Purchase shade Make retaining ring Assemble sub-assemblies 1&2 (sub-assembly 3) Assemble lamp (final assembly) Final inspection Cable Stem Bulb holder Retaining ring Shade Base Feet

23. MGT3303 Michel Leseure Operations Process Chart Part nameTable leg Part no.2410 UsageTable Assembly No.437 Oper No.DescriptionDept.MachineTimeTools 10Saw to rough length041 20Plane to size043 30Saw to finished length041 40Measure dimensions051 50Sand052

24. MGT3303 Michel Leseure Process Flowchart Symbols Operations Inspection Transportation Delay Storage

25. MGT3303 Michel Leseure Process Flowcharts

26. MGT3303 Michel Leseure Process Analysis Continuous improvement –Basic tool - process flowchart, process analysis –Incremental, continuous pressure to improve Reengineering –Basic tool - process map –Radical redesign approach

27. MGT3303 Michel Leseure The Reengineering Process Customer requirements data Strategic directives Goals & specifications for process performance Detailed process map Pilot study of new design Full-scale implementation Benchmark data Design Principles Key Performance Measures Baseline Data Innovative Ideas Model Validation High level process map

28. MGT3303 Michel Leseure High-level Process Map Input Output Performance Goal Subprocess

29. MGT3303 Michel Leseure Design Principles For Reengineering 1. Organize around outcomes, not tasks 2. Capture information once, at the source 3. Centralize resources with info. tech. 4. Link parallel subprocesses 5. Design to do work right the first time 6. Remove complexity 7. Identify information & technology levers

30. MGT3303 Michel Leseure Techniques For Generating Innovative Ideas Vary entry point to a problem Draw analogies Change your perspective Try inverse brainstorming Chain forward as far as possible Use attribute brainstorming

31. MGT3303 Michel Leseure Technology Management

32. MGT3303 Michel Leseure Automated Material Handling Conveyors Robots Automated guided vehicle systems (AGVS) Automated storage & retrieval systems (ASRS)

33. MGT3303 Michel Leseure Flexible Manufacturing Systems (FMS) Programmable machine tools Controlled by common computer network Combines flexibility with efficiency Reduces setup & queue times

34. Flexible Manufacturing System Parts Finished goods LoadUnload Computer control room Terminal Tools Conveyor Pallet CNC Machine

35. MGT3303 Michel Leseure Robots Programmable manipulators that follow specified paths Better than humans for – hostile environments – long hours – consistency

36. MGT3303 Michel Leseure Components Of CIM CIM Product design Manuf Process planning Systems mgmt RoboticsFMS NC/CNC/ DNC Cells & centers Automated inspection AGV, ASRS JIT/ kanban DSS/ES/ AI LAN, TOP, satellites TQM Bar codes, EDI MRP GTCAECAD IGES, PDES DFM Cellular manuf MAP, STEP CAD/CAM CAPP

37. MGT3303 Michel Leseure Adoption Of Technology Technology Readiness Need well-designed products & efficient processes Technology Design Know what to automate Technology Selection Choose the right level Technology Integration Have a strategy for incremental automation

38. MGT3303 Michel Leseure Suggested Homework Problem 4.1, 4-2, 4-3, 4-4, 4-5, 4-6 p. 153 Yellow Plates Process Mapping exercise